GSK Rebuffs Unilever’s Offers for Consumer Healthcare Unit

 

GlaxoSmithKline has declined all three of Unilever PLC’s offers to acquire its Consumer Healthcare business, saying that the proposal undervalued the division’s present and further worth. 

In a statement issued last week, GSK said the unsolicited, conditional and non-binding offers from its competitor valued the Consumer Healthcare unit at £50 billion ($68.23 billion), composed of £41.7 billion ($56.88 billion) in cash and £8.3 billion ($11.32 billion) in Unilever shares. GSK owns 68% of the said business, while Pfizer owns 32%. 

GSK also noted that its board carefully reviewed Unilever’s proposal against its demerger plans for the unit in mid-2022 and found it insufficient. GSK’s leadership recommended that the company remain on track for its 2022 plans, subject to shareholders’ approval.

The company’s global consumer healthcare business logged £9.6 billion ($13.09 billion) in annual sales in 2021, serving over 100 markets, which means it is well-positioned to grow even further in the expanding £150 billion ($204.65 billion) global consumer healthcare industry. 

The strong demand for the division’s offerings is driven by the increasing needs of an aging population, enhanced attention on health and wellness, the rise of the middle class, and other significantly unmet consumer needs. The GSK board expects the unit to sustainably deliver 4% to 6% in organic sales growth per year in the medium term. 

Two days after GSK’s rejection, Unilever issued a press release stating that the consumer health division would be highly complementary to its business without directly mentioning its reaction to GSK’s decision. 

Unilever noted that 45% of GSK’s unit is focused on vitamins, minerals and supplements (VMS) and oral care — two categories where Unilever already has a significant market presence worldwide.

“OTC would be an attractive adjacent category, with the ability to combine Unilever’s consumer and branding expertise with GSK Consumer Health’s technical OTC capabilities. The acquisition would create scale and a growth platform for the combined portfolio in the US, China, and India, with further opportunities in other emerging markets,” noted Unilever. 

Unilever is reportedly planning to announce a major initiative before the end of January.

“After a comprehensive review of our organization structure, we intend to move away from our existing matrix to an operating model that will drive greater agility, improve category focus, and strengthen accountability,” it said in the statement. 

“A series of initiatives have been implemented to enhance operating performance. These include increased focus on operational excellence to improve market competitiveness, and aligning resources to five clear strategic choices. We have also strengthened our portfolio through the establishment of fast-growing new businesses of scale in Prestige Beauty and Functional Nutrition, and the divestment of Spreads and Tea,” added Unilever.