Unilever Continues to Pursue GSK Healthcare, Despite Three Failed Bids – WWD
LONDON – After facing a barrage of criticism over three failed bids for GSK’s consumer healthcare division, Unilever has reiterated its interest in British owners of Advil and Sensodyne – and their own strategy of focusing on the high-growth health, beauty and hygiene categories.
Unilever, the parent company of brands ranging from Dove cleaning bleach to Domestos, confirmed over the weekend that it wanted to buy GlaxoSmithKline’s consumer healthcare division and was determined to do so despite the GSK rejected its latest bid, valuation of £50 billion.
Early Monday morning, before the stock market opened, Unilever sent out a statement saying management was “committed to accelerating the growth of the company and repositioning its portfolio into growth categories.” higher.”
It said that, due to reported interest in GSK Consumer Healthcare, it wanted to issue a planned update and set out its strategic direction.
That strategy includes expanding Unilever’s presence “physically” in the health, beauty and hygiene categories, industries with “higher sustainable market growth and opportunities for significantly to drive growth through investment and innovation”.
Unilever said it would leverage its “strong presence” in emerging markets to drive that growth.
The company also said any major acquisitions would be accompanied by “rapid divestments” of lower-growth brands and businesses. Unilever doesn’t explain what those businesses are, but it means food. The company recently agreed to sell its tea business, which also sold margarine and expanded the division a few years ago.
“Unilever is committed to strict financial discipline to ensure that acquisitions create value for shareholders,” the company said.
“The company benefits from a solid balance sheet and cash flow and remains committed to maintaining its A-band credit rating. Following any acquisition, the company will aim to return to current levels in the short to medium term,” said Unilever.
It argued that GSK’s consumer division would be a “strong strategic fit”, noting that 45% of that business is oral care and VMS (vitamins, minerals, supplements), which portfolio which Unilever says “has significant presence and capacity . ”
Unilever added that the acquisition of GSK’s consumer arm will also provide “value and certainty” to GSK and Pfizer shareholders.
Later this month, Unilever said it would announce a “major initiative” to boost its operational efficiency, with plans to shift to an operating model that fosters “more agility, improvement focus on the portfolio and strengthen accountability”.
The company also plans to update its fourth-quarter and full-year results on February 10.
In a research note published shortly after Unilever’s statement on Monday morning, RBC said it disagreed with Unilever’s statement that GSK’s business would be a strong strategic fit.
The bank believes there is little overlap between the vitamins, minerals and dietary supplements businesses of the two companies and thinks Unilever will find it difficult to bring GSK’s over-the-counter drugs to markets such as India, China and America.
The clinical and medical characteristics of the GSK Consumer Health category mean much more restrictive regulation than the rest of Unilever’s business, RBC writes. “This makes it much more difficult to bring brands into new markets.”
RBC added that their overall view of Unilever is that it risks “under-distribution due to non-investment”.
Over the weekend, after Unilever confirmed its interest in healthcare service GSK, the British press criticized the giant and its executives. Alan Jope.
Shares of Unilever opened 6.5% lower at 36.80 pounds on Monday.
https://wwd.com/business-news/financial/unilever-continues-pursue-gsk-healthcare-despite-three-failed-bids-1235035229/ Unilever Continues to Pursue GSK Healthcare, Despite Three Failed Bids – WWD