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By Siddharth Cavale
Jan 20 (Reuters) - Influential British fund manager Terry
Smith attacked Unilever's failed 50 billion pound ($68.2
billion) bid for GSK's Consumer Health assets as a "near
death experience" and urged Unilever management to focus on
strengthening performance.
In a letter https://www.fundsmith.co.uk/analysis to
investors of his Fundsmith vehicle, now the 13th biggest
Unilever shareholder, Smith criticized Unilever for
failing to openly communicate the benefits of the deal and its
"penchant for corporate gobbledegook as substitute for effective
action."
"It seems to us that Unilever management's response to its
poor performance has been to utter meaningless platitudes to
which it has now attempted to add major M&A activity. What could
possibly go wrong?," said the letter, signed by Smith and head
of research, Julian Robins.
Unilever did not immediately respond to a request for
comment.
Late on Wednesday, Unilever effectively abandoned its offer
for GlaxoSmithKline's Consumer Health unit, after the deal was
widely panned by the market and analysts.
GSK had said the bid undervalued the business and that it
would go ahead with its plan to spin it off instead.
"We are pleased that the Unilever management listened and
has seemingly ended the attempt to acquire GSK Consumer by
refusing to up its bid for a fourth time," the letter said,
describing its critique as a post-mortem into a "near death
experience" in the form of the failed approach.
Smith's "near death experience" phrase echoed comments made
by Unilever's previous CEO Paul Polman when describing his
successful fight against a hostile takeover bid by Kraft Heinz
in 2017.
Having rejected the bid, GSK's consumer business would face
its own reckoning when it is listed as a separate company later
this year, the Fundsmith letter added.
This isn't Smith's first recent attack on Unilever.
Last week, he criticised Unilever for being "obsessed" with
sustainability at the expense of performance, after the stock
featured among its equity fund's bottom-5 performers in 2021.
($1 = 0.7332 pounds)
(Reporting by Siddharth Cavale in Bengaluru
Editing by Keith Weir)
