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Evening Standard
Evening Standard
Business
Oscar Williams-Grut

Unilever vows not to increase GSK bid

Unilever

(Picture: PA Archive)

Unilever has effectively ruled out a fourth takeover approach for GlaxoSmithKline’s consumer healthcare business after vowing not to increase its offer.

In a statement at market close on Wednesday, Unilever said: “We note the recently shared financial assumptions from the current owners of GSK Consumer Healthcare and have determined that it does not change our view on fundamental value. Accordingly, we will not increase our offer above £50bn.”

News broke over the weekend that GSK had rejected three approaches from Unilever for its consumer healthcare business in recent weeks, the latest of which valued it at £50 billion.

GSK, which is pursuing a spin-out of the Panadol-to-Aquafresh division, rejected the bid, saying it “fundamentally undervalued the Consumer Healthcare business and its future prospects.”

Speculation has been rife that Unilever could return with a sweetened offer. At a hastily arranged press conference on Monday, CEO Alan Jope said GSK remained “a very attractive option in the consumer health space.”

Analysts and investors roundly rejected Jope’s plans, with concerns over the risks associated with executing such a large transaction and the high levels of debt involved. Critics also pointed to the Unilever’s poor M&A track record.

Shares in the company, known for Dove soap, Hellmann’s mayonnaise and Ben & Jerry’s ice cream, sunk over 10% once news of the deal talks broke, though pressure eased somewhat today.

The company said: “Unilever is committed to maintaining strict financial discipline to ensure that acquisitions create value for our shareholders. Unilever also reiterates its commitment to continuing to improve the performance of its existing portfolio through its ongoing focus on operational excellence, its upcoming reorganisation and by rotating the portfolio to higher growth categories.”

The continued commitment to “rotating the portfolio to higher growth categories” is likely to fuel speculation about other potential takeover candidates. Jope has signalled he is committed to betting Unilever’s future on the fast-growing health, beauty and hygiene sector and offloading slow growing food and drink brands as he transforms the business. He said this week that GSK is “not the only option”, saying: “There are other consumer healthcare businesses that represent also very attractive potential.”

Analysts have suggest the consumer healthcare businesses of Reckitt Benckiser and Johnson & Johnson could be targets for Unilever if the GSK pursuit ends. Like GSK, Johnson & Johnson is pursuing a spin-out of its consumer arm.

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