* Unilever shares fall 6%, GSK gains
* Unilever signals it would pursue deal for GSK unit
* Says committed to "strict financial discipline"
(Adds Unilever, analyst comments, background)
By Pushkala Aripaka and Keith Weir
Jan 17 (Reuters) - Unilever signalled on Monday it
would pursue a deal for GlaxoSmithKline's consumer
healthcare business, calling it a "strong strategic fit" after
its 50-billion-pound ($68.4 billion) offer was rebuffed, sending
its shares down 6%.
GSK confirmed over the weekend that it had rejected the Dove
soap maker's bid for the business, which is home to brands such
as Sensodyne toothpaste, Emergen-C vitamin supplement and
Panadol painkiller.
Its shares jumped 5% in early trading to their highest
level since May 2020. GSK said on Saturday Unilever's proposal
"fundamentally undervalued" the unit, adding that it would stick
to its plan of listing the division this year.
"Initial feedback on the deal from investors over the
weekend has been almost uniformly negative," Jefferies analysts
said in a note.
Unilever, however, defended the bid.
"The acquisition would create scale and a growth platform
for the combined portfolio in the U.S., China and India, with
further opportunities in other emerging markets," it said,
pointing to synergies in the oral care and vitamin supplements
business.
The Marmite maker held talks with banks about additional
financing for a potential sweetened offer, Bloomberg News
reported on Sunday, citing people familiar with the matter.
Unilever declined to comment on the discussions.
The GSK consumer business, in which U.S. drugs company
Pfizer owns a 32% stake, has annual sales of almost 10
billion pounds.
"It's a little surprising that they (GSK) haven't ripped
Unilever's arm off at £50bn, as it's a decent price, with the
only question being as to whether it's the right one," CMC
Markets analyst Michael Hewson said in a note.
"It might be for GlaxoSmithKline and Pfizer, however there
is a feeling that for Unilever it could well prove to be too
high a price," Hewson added.
EXECUTION
While a deal of this size would be the biggest globally
since the start of the pandemic if it goes through, Unilever
boss Alan Jope has been under pressure to turn around its
languishing stock price as it struggles with high costs.
Barclays analysts said the deal would be "very complex to
execute in normal times, let alone in the middle of a global
pandemic".
Unilever, which is set to announce an initiative later this
month to strengthen its business, said on Monday it was
committed to "strict financial discipline" for any acquisitions,
adding that such deals would be accompanied by the divestment of
lower margin businesses or brands.
GSK has been pursuing a separate listing of the consumer arm
following pressure from investors to explore a shake-up of the
company and focus on its pharmaceuticals business.
($1 = 0.7312 pounds)
(Reporting by Pushkala Aripaka and Siddharth Cavale in
Bengaluru, Keith Weir in London and Ludwig Burger in Frankfurt;
Editing by Shounak Dasgupta and Emelia Sithole-Matarise)