On Saturday, Unilever confirmed it approached GSK and Pfizer about a potential acquisition of their jointly held Consumer Healthcare business, which is one of the largest in the world and a market leader in the U.S., Germany and India.
The company’s three bids, the latest of which was for 50 billion pounds, have been rejected by GSK, which believes they undervalue the business. GSK’s consumer division, which is run as a JV with Pfizer, includes Sensodyne toothpaste, Polident denture products, pain reliever Advil and Centrum vitamins.
GSK holds a majority controlling interest of 68 percent in the JV, while Pfizer has a 32 percent stake.
In the statement, Unilever referred to GSK Consumer Healthcare as a “leader in the attractive consumer health space and would be a strong strategic fit as Unilever continues to reshape its portfolio. There can be no certainty that any agreement will be reached.”
As reported, Unilever has been putting a strong focus on premium beauty, but also on health, wellness and nutrition.
It is also looking to boost the value of its shares, which have fallen around 4.5 percent under CEO Alan Jope, whose mantra is people over profit and who is leading a sustainability crusade at the consumer giant, parent of brands ranging from Dove, Pond’s, Vaseline to Ben & Jerry’s.
On Friday, Unilever shares ended the day flat, closing at 39.37 pounds. GSK’s shares also closed flat at 16.43 pounds.
GSK announced last summer it was looking to spin off its Consumer Healthcare division with a new stock exchange listing, while GSK would focus on its vaccines and pharma businesses.
Last month, GSK named Sir Dave Lewis, a former Unilever executive and the man who turned the ailing Tesco around, as executive chair designate of the new consumer health care company, post-spin-off. Lewis was a graduate trainee at Unilever, and rose to become president of global personal care at the company before leaving to become CEO of Tesco.
In a separate statement issued on Saturday, GSK confirmed that it has received three unsolicited, conditional and nonbinding proposals from Unilever plc to acquire the health care business.
It said the latest proposal, received on Dec. 20, was for a total acquisition value of 50 billion pounds, comprising 41.7 billion pounds in cash and 8.3 billion pounds in Unilever shares.
GSK said it rejected all three proposals “on the basis that they fundamentally undervalued the Consumer Healthcare business and its future prospects.”
The company said that its board is “strongly focused on maximizing value for GSK shareholders and has carefully evaluated each Unilever proposal. In doing so, the board and its advisers assessed the proposals relative to the financial planning assessments completed to support the proposed demerger of the business in mid-2022, including the sales growth outlook.”
It said the health care business had annual sales of 9.6 billion pounds in 2021, and an “exceptional portfolio of world-class, category-leading brands; global scale with footprint and distribution capability to serve more than 100 markets; strong brand building, innovation and digital capabilities; and offers a unique proposition that combines trusted science with human understanding.”
GSK added that the business is well-positioned to sustainably grow ahead of its categories in the years to come. “The fundamentals for the 150- billion-pounds consumer healthcare sector are strong, reflecting an increased focus on health and wellness, significant demand from an aging population and emerging middle class, and sizable unmet consumer needs.
“The board of GSK is confident that the Consumer Healthcare business can sustainably deliver annual organic sales growth in the range of 4 to 6 percent (at constant exchange rates) over the medium term.”
GSK said it will move forward with the proposed demerger of the Consumer Healthcare business, to create “a new independent global category-leading consumer company which, subject to approval from shareholders, is on track to be achieved in mid-2022.”