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(Changes Glaxosmithkline to GlaxoSmithKline in pararagraph 1)
* Unilever confirms interest in GSK assets
* GSK consumer business would be "strong strategic fit"
* Sunday Times says 50 billion-pound bid rejected in late
2021
* Unilever is under pressure from shareholders over stock
price
By Siddharth Cavale, Ludwig Burger and Mrinmay Dey
Jan 15 (Reuters) - Consumer goods giant Unilever
said it had approached GlaxoSmithKline about buying the
pharmaceutical group's consumer goods arm, after a newspaper
reported that a 50 billion-pound ($68.4 billion) bid it made had
been rebuffed.
Unilever, which has been under fire from some investors over
its underperforming share price, confirmed the approach about a
potential acquisition of the business in a statement on
Saturday.
"GSK Consumer Healthcare is a leader in the attractive
consumer health space and would be a strong strategic fit as
Unilever continues to re-shape its portfolio," it said.
"There can be no certainty that any agreement will be
reached."
GSK declined to comment on the approach. The group's
consumer goods business is due to be spun out into a separate
listing in the middle of this year.
Earlier, Britain's Sunday Times said the Unilever bid for
the business made late last year was worth roughly 50 billion
pounds, and had been rejected as too low by GSK and Pfizer
, which owns a minority stake in the division.
The approach by Unilever, which owns brands such as Dove
soap and Marmite, for Glaxo's portfolio of household brands
including Panadol painkillers and Sensodyne toothpaste was
understood to have been unsolicited, the report added.
The bid did not include any takeover premium or recognition
of synergies, the newspaper said, adding that it was not clear
whether the group would make a higher offer.
Unilever declined to comment on whether it would return with
a higher bid. Brokerage Jefferies last year put a valuation for
the whole consumer unit at 45 billion pounds.
The offer comes at a time Unilever's Chief Executive Alan
Jope is under pressure to turn around its languishing stock
price as it struggles to compete in the face of high
inflationary costs, especially in emerging markets, its biggest
source of revenue.
The FTSE-listed conglomerate's stock has fallen 10% over the
past year compared with P&G's 18% rise and Reckitt's 1.4%
decline, despite a pandemic-driven boost in shopping for
groceries and household goods that has benefited all three
companies.
British fund manager Terry Smith, whose Fundsmith vehicle is
a top-10 Unilever investor, this week criticized the group for
promoting sustainability credentials at the expense of
performance.
Smith was not immediately available to comment.
INVESTOR PRESSURE
Investor activism has also reared its head at GSK.
In April last year, U.S. activist hedge fund Elliott
Management revealed a multi-billion pound stake in GSK, putting
pressure on CEO Emma Walmsley to explore a shake-up of the
company after it fell behind in the COVID-19 vaccine race.
The consumer remedies industry, which has traditionally been
attached to the prescription drug sector, is also in a phase of
major transformation as several pharma companies no longer see a
benefit in a combination.
Johnson & Johnson in November unveiled plans to spin
off its consumer health division, owner of the Listerine and
Baby Powder brands, to focus on pharmaceuticals and medical
devices. Sanofi has said its consumer unit would become
“standalone” business.
For Unilever, the deal would be the biggest move for Jope
since becoming CEO in 2019.
He has previously shot down suggestions that Unilever was in
the market for big deals, saying instead that the company would
focus on smaller acquisitions in fast-growing areas such as
luxury beauty, plant-based foods and health and wellness.
If a deal with GSK does go through, it will be Unilever's
second with the company after it bought its health food drinks
business, including Horlicks, in India and other Asian markets
for 3.3 billion euros in 2018.
($1 = 0.7314 pounds)
(Writing by William Schomberg; Editing by Mark Heinrich and Jan
Harvey)
