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(Alliance News) - Unilever on Monday confirmed its takeover approach for GSK Consumer Healthcare and set out the strategic rationale for the move, saying it plans to push further into health, beauty and hygiene.
These categories offer "higher rates of sustainable market growth", it said, adding that major acquisitions will be carried out alongside the divestment of lower growth brands.
GSK Consumer Healthcare would be a good fit with this new direction, Unilever explained. The deal would combine Unilever's consumer and branding knowledge with GSK Consumer Healthcare's technical over-the-counter capabilities. Unilever noted that 45% of the GSK consumer business is in Oral Care and in Vitamins, Minerals & Supplements - categories in which Unilever already has a presence.
Over the weekend, GlaxoSmithKline confirmed it received and rejected three unsolicited and non-binding bids for the GSK Consumer Healthcare business from consumer goods maker Unilever.
The latest offer from Unilever was made on December 20 and had a total acquisition value of GBP50 billion, comprising GBP41.7 billion in cash and GBP8.3 billion in Unilever shares. The offer was rejected by the Brentford, England-based pharmaceutical group, on the grounds that the offer undervalued the business.
The approach was first reported by the Sunday Times newspaper on Saturday.
Unilever said: "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."
Meanwhile, GlaxoSmithKline said it remains focused on carrying on with the proposed demerger of GSK Consumer Healthcare and having it list on the London Stock Exchange in mid-2022. The business was formed in August 2019 as a joint venture with Pfizer, which has a 32% interest, while GSK holds the remaining 68%.
Unilever said it will provide a fourth quarter trading update on February 10. GlaxoSmithKline said it will provide its growth plans for the consumer healthcare business at a virtual capital markets day on February 28, following its 2021 results on February 9.
GlaxoSmithKline shares were up 5.2% early Monday, while Unilever shares were down 5.8%.
Analysts at Bernstein cut Unilever shares to Underperform from Market-Perform.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,581.56
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Hang Seng: down 0.7% at 24,218.03
Nikkei 225: closed up 0.7% at 28,333.52
S&P/ASX 200: closed up 0.3% at 7,417.30
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DJIA: closed down 201.81 points, 0.6%, at 35,911.81
S&P 500: closed up 0.1% at 4,662.85
Nasdaq Composite: closed up 0.6% at 14,893.75
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EUR: flat at USD1.1425 (USD1.1423)
GBP: firm at USD1.3682 (USD1.3675)
USD: up at JPY114.38 (JPY113.82)
Gold: up at USD1,821.76 per ounce (USD1,818.19)
Oil (Brent): up at USD86.48 a barrel (USD85.56)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's key economic events still to come
US Martin Luther King Day holiday. Financial markets closed.
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The UK property market kicked off the year with a bang, as house prices rose annually at the strongest pace in almost six years, figures from Rightmove showed. UK house prices climbed 0.3% monthly to GBP341,019 in January. Annually, prices were 7.6% higher, the chunkiest yearly growth rate since May 2016, when prices surged 8.3%. "Asking prices traditionally see a rise in January, though this month's figure is compared with an unusual drop in January last year as the rush to beat the March stamp duty deadline started to abate," Rightmove commented. "The jump in average asking prices this month is driven by homes in the 'top of the ladder' and 'first-time buyer' sectors, with first-time-buyer type homes hitting a new record average asking price of GBP214,176."
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BROKER RATING CHANGES
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BERNSTEIN CUTS UNILEVER TO 'UNDERPERFORM' (MARKET-PERFORM) - PRICE TARGET 3,500 PENCE
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UBS RAISES ANTOFAGASTA TO 'NEUTRAL' (SELL) - PRICE TARGET 1,400 (1,300) PENCE
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HSBC RAISES ADMIRAL GROUP TO 'HOLD' ('REDUCE')
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COMPANIES - FTSE 100
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Taylor Wimpey backed market forecasts for 2021 in a year which saw strong demand for its homes. Total UK home completions rose by 47% to 14,087 in 2021, and the net private reservation rate was 0.91 homes per outlet per week, up from the previous year's 0.76. Demand was underpinned by low interest rates and good mortgage availability, while house price inflation fully offset cost pressures. The business "performed very well", and the housebuilder expects to report 2021 results in line with expectations, with significant improvement in operating margin. The current year has started well, with forward indicators positive despite wider economic uncertainty. "Market conditions remain supportive, and we continue to see strong demand for our homes. Our strategy of optimising sales rates, prices and operational excellence and efficiencies is enabling us to drive a significant improvement in operating margin," said Chief Executive Pete Redfern.
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Hikma Pharmaceuticals said it has agreed to buy the Canadian assets of Teligent for USD45.8 million, representing the firm's expansion into Canada. The deal includes a portfolio of 25 sterile injectable products, three in-licenced ophthalmic products, and a pipeline of seven additional products, four of which are approved by Health Canada. Hikma's purchase follows Teligent in October filing for voluntary protection under Chapter 11 of the US Bankruptcy Code. As part of this, Teligent initiated a sale of its core assets, allowing Hikma to snap up its Canadian portfolio. "This acquisition further expands our portfolio of essential sterile injectable medicines and gives Hikma an entry into the highly attractive Canadian injectables market," said Hikma Injectables President Riad Mishlawi.
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COMPANIES - FTSE 250
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Emerging markets asset manager Ashmore reported a decline in assets under management over the course of the last three months of 2021. Assets under management finished December at USD87.3 billion, down from USD91.3 billion at the end of September. This decline comprised net outflows of USD2.2 billion and negative investment performance of USD1.8 billion. "Against the backdrop of generally declining Emerging Markets over the quarter, Ashmore's relative performance was positive in local currency, equity and investment grade strategies, and weaker in some US dollar-denominated strategies," the firm highlighted.
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COMPANIES - MAIN MARKET AND AIM
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Perth-based diversified miner South32 announced it has completed a pre-feasibility study for the Taylor deposit, marking an "important milestone" that may establish its Hermosa project in the US as a significant producer of zinc, lead and silver. The Taylor deposit is South32's first development option at its wholly owned Hermosa project in Arizona. The results of the pre-feasibility study support Taylor's potential to be the first development of a multi-decade operation, establishing Hermosa as a globally significant producer of metals critical to a low carbon future, South32 said. Completion of the feasibility study and a final investment decision to construct Taylor are expected in mid-2023.
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Clean Power Hydrogen, a company that has developed a membrane-free electrolyser to produce green hydrogen, said it plans to list on the AIM in London in early February. The company plans to raise GBP50 million in an initial public offering led by Cenkos Securities. Clean Power Hydrogen said it will use the funds raised to build a factory in Northern Ireland.
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Monday's shareholder meetings
ADM Energy PLC - GM re requisition to remove directors
Boston International Holdings PLC - AGM
Cardiff Property PLC - AGM
Cloudcall Group PLC - GM re cash acquisition by Xplorer Capital Growth
Edge Performance VCT PLC - AGM
Orcadian Energy PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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