Unilever has approached GlaxoSmithKline about the potential acquisition of its consumer healthcare joint venture with Pfizer for up to £50 billion, in what could become one of the market’s biggest deals. London.
The consumer goods group said on Saturday that it “approached GSK and Pfizer regarding a potential business acquisition.” Official bids are not requested. GSK declined to comment.
“GSK Consumer Health Care is an attractive consumer healthcare leader and will be a strong strategic fit as Unilever continues to reshape its portfolio. Unilever added.
The Sunday Times, which first reported on the bid, said the maker of Dove soap and ice cream Magnum had offered around £50 billion for the division late last year, but had been turned down.
Analysts have valued the business at between £47 billion and £48 billion, suggesting the bid does not include significant premiums or significant savings from the synergies between the two consumer companies.
Unilever declined to comment on whether it would return with a higher bid.
GSK has been preparing to spin off the division, forming a joint venture with Pfizer to produce the pain reliever Panadol, the cold and flu medicine Theraflu, and the decongestant Otrivin. New parts will be made by insider Brian McNamara and its board of directors Dave Lewis, the former chief executive officer of Tesco.
Active investors including US hedge fund Elliott Management have put pressure, put pressure about Emma Walmsley, chief executive officer of GSK, to explore other options – including a sale – if it could generate greater returns for shareholders. Walmsley plans to use the proceeds from the turnaround to bolster its lackluster drug and pharmaceutical sales pipeline.
Pfizer owns 32% of the division, which GSK said it will list in London this year, although private equity groups have also considered a potential purchase.
The Unilever acquisition will be one of the biggest ever on the London market, bringing together the FTSE’s third-largest company with a division that, if independent, would be in the top 20. It will be competed only by Vodafone’s acquisition of Germany’s Mannesmann in 1999 and AB InBev’s purchase of SABMiller in 2016.
The approach comes as Unilever, already one of the world’s largest consumer goods groups, is looking to renew its momentum after a period of poor sales growth.
Its share price has fallen since chief executive Alan Jope took over in 2019 and top 10 investor Terry Smith this week company attack is “labor under the weight of a management obsessed with publicly displaying sustainability information at the expense of focusing on the fundamentals of the business”.
Other investors objected to that, but most agreed that the company must address its underperformance. It agreed last year sold off its tea division, which has been a drag on growth, for 4.5 billion euros to private equity group CVC, but has yet to make a major acquisition under Jope .
Unilever in 2018 agreed to a deal to acquire GSK’s healthy food and beverage business, including the Horlicks brand, in India and other Asian markets for 3.3 billion euros . It has also acquired a range of small consumer health brands, including Smarty Pants, Olly and Onnit supplements and Liquid IV beverage mix.