Consumer goods giant Unilever is working on a £ 50bn megadeal to buy a stake in rival GlaxoSmithKline, which will change the group.
GSK announced yesterday that Unilever had implemented three approaches late last year – a third for £ 41.7bn in cash and £ 8.3bn for shares.
The 92-year-old owner of Lipton Tea and Ben & Jerry’s ice cream, Unilever GSK wants to take over the consumer division and add brands such as Sensodyne, Nicorette and Panadol to its brand portfolio.
Brush: Glaxo rejected Unilever’s secret offer for Sensodyne toothpaste maker just before Christmas. The most recent offer came in third for £ 41.7 billion in cash and £ 8.3 billion in shares.
The deal will also increase Unilever’s size, adding about £ 10bn to sales, making it harder for Procter & Gamble to become the world’s second-largest consumer goods group after Nestle.
Yesterday, Unilever confirmed that it had taken an unsolicited approach to “potential acquisitions” to GSK and Pfizer, which owns a stake in the division. The approach was rejected.
Unilever, which owns The Mail on Sunday, Marmite and Dove Soap, realizes it is preparing to resume talks this weekend.
In a statement yesterday, Unilever said: “GSK Consumer Healthcare is a leader in attractive consumer health and will be a strong strategic fit as long as Unilever continues to reshape its portfolio. No agreement can be reached.”
GSK said it had rejected all three proposals because it did not fully appreciate the consumer health care business and its future prospects.
He added that the business could “provide annual organic sales growth of 4-6 per cent in the medium term”.
The GSK and Pfizer boards had to consider higher bids as part of their trusted duty to shareholders. The consumer section is valued at around £ 42 billion by analysts. Goldman Sachs set him a price tag of £ 48 billion.
Jupiter Asset Management fund manager Richard Buxton, who has invested in GSK for a decade, said the pharmaceutical giant was “absolutely right to deny it.”
He added: “Unilever, given their poor performance, will have people who are absolutely wrong in managing it.” GSK aims to separate its consumer health unit by temporary flotation by the middle of this year.
The department is chaired by Sir Dave Lewis, who previously headed Tesconi. He has also previously worked with Alan Jope, CEO of Unilever.
Buxton added: “The approach shows that GSK’s consumer business is a hidden gem, and with its split, it will be a real start to understanding what a great business it is.
“You want to break down and allow the market to understand the business on its own for 18 months to two years and evaluate it accordingly, and I’m sure it’s worth more than £ 50 billion.”
Home names: Panadol is another brand portfolio that Unilever could add to its sustainability if a deal is reached for the GlaxoSmithKline consumer division.
The Sunday Times, which reported Unilever’s interest on its website yesterday, said it was not yet clear whether Unilever shareholders would support such a bold acquisition.
The news of the approach came just days after Unilever’s top fund manager, Terry Smith, criticized the FTSE100 for “losing the plot” and “training to publicize sustainability data by focusing on the basics”. “He’s gone,” he said. .
Billionaire investor Peter Hargreaves said Unilever agrees that it should not be “overwhelmed” by strategies that do not benefit shareholders.
The city veteran, who owns shares in the Blue Whale Foundation until 2020, said focusing too much on environmental, social and management goals could be distracting.
He said: “The most important thing for any business is profitability because if the company is profitable, you can do all of this. [sustainable] things. ‘
Unilever’s shares have fallen one-tenth in the past year to £ 16.43. Jope, who will be the CEO in 2019, is trying to focus on high growth rates and networks.
The acquisition of GSK’s consumer division allows the product range to benefit from being part of a much larger group, which can increase overall value.
It is estimated that Unilever is already involved in about 40 percent of GSK consumer businesses.
Unilever defended itself in 2017 when it faced a £ 115bn hostile offer from U.S. giant Kraft Heinz.
This stopped the approach. But last year, there were rumors that it could be disbanded by active City Foundations, such as U.S. veteran activist Nelson Peltz.
GSK, led by Dame Emma Walmsley, was also under pressure from active investor Elliott Advisers.
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