Dove soap maker Unilever stands for GSK consumer arm search; shares are falling by Reuters

Pushkala Aripaka, by Keith Weir and Pamela Barbaglia

(Reuters) – Unilever said on Monday it would reach a deal for GSK’s consumer business, saying it was a “strong strategic adjustment”, but that Unilever (NYSE 🙂 shares fell by more than 8%, highlighting investor doubts about its $ 50 billion. . pound ($ 68.4 billion) bid.

GlaxoSmithKline (NYSE 🙂 confirmed over the weekend that it had rejected three offers from soap producer Dove for the consumer health business, including brands like Sensodyne Toothpaste, Emergen-C Vitamin Supplement and Painful Panadol.

GSK, led by Emma Walmsley, has been hired by Goldman Sachs (NYSE) Citigroup (NYSE 🙂 To review Unilever’s approach, but will not take part in negotiations unless Unilever raises its bid, according to sources familiar with the matter.

GSK shares rose to 6% in May 2020. He said on Saturday that Unilever’s proposal had “fundamentally underestimated” the consumer business, and added that it would stick to the plan to list the division this year.

“Initial feedback on the investor deal over the weekend has been almost negative,” Jefferies analysts said in a statement. Others noted that the fall in Unilever’s share price was due to a lack of confidence in its management and a concern for the price.

Marmite spread maker, however, defended GSK’s consumer business offer to the US drug company Pfizer (NYSE 🙂 has a 32% stake.

“This acquisition would create a scale and growth platform for the combined portfolio in the US, China and India, and will have more opportunities in other new markets,” said Unilever, noting the synergies of the oral care and vitamin supplement business.

GSK and Pfizer would open negotiations with Unilever chief Alan Jope if the consumer goods giant were willing to improve its offer to more than £ 60bn, a source familiar with Pfizer’s strategy said.

The source described the business as a “legitimate standalone candidate” and added that its market value could rise to nearly $ 100,000 billion after the business was split and listed.

“It has a higher value right now in a spin-off, but if Unilever is willing to go north from £ 60 billion, a dialogue can begin,” he said.

GSK declined to comment and Pfizer did not immediately respond to a request for comment on the fate of GSK’s consumer business.

EXECUTION

GSK established its nL4N2R82AU plans in June last year to separate the consumer arm list, analyze the company’s change as a result of investor pressure, and focus on its pharmaceutical business.

The purchase of Unilever by the consumer division would be one of the largest ever in the London market and one of the biggest deals in the world since the COVID-19 pandemic began.

It would also drive Unilever’s growth strategy, as management has been under pressure to turn around the company’s languid share price and deal with high costs and low margins, but raises questions about its strategy nL4N2TX2WJ.

Some analysts expressed doubts about Unilever’s ability to sweeten GSK’s offer.

“Given the voice of investors’ concerns about the reaction of late and Unilever stock prices, this could prevent a larger offering from taking place, ”said Chris Beckett, head of capital research at Quilter Cheviot.

GSK’s consumer interest reports, including those of private equity players, have been making headlines for a while.

“It’s a bit surprising (GSK and Pfizer) that Unilever’s arm was not removed at £ 50bn, which is a decent price, the only question is whether it’s appropriate,” Michael Hewson told CMC Markets analysts. note.

“It may be for GlaxoSmithKline and Pfizer, however, he believes it could prove to be too high a price for Unilever,” Hewson added.

Unilever, which will announce an initiative to strengthen its business this month, said on Monday it was committed to “strict financial discipline” for any purchases, adding that such agreements would go hand in hand with lower-margin business or brand divestment.

($ 1 = £ 0.73)