(Adds details on GSK's financial assumptions, Pfizer stake)
Jan 19 (Reuters) - Unilever PLC on Wednesday
effectively abandoned its plans to buy GlaxoSmithKline's
consumer healthcare business, saying that it would not raise its
50 billion pound ($68 billion) offer that GSK previously
rejected.
U.S.-listed shares of Unilever rose 10.1% on the news, while
GSK's fell 2.8% . The two stocks also trade on the FTSE,
where the day's trading had closed.
GSK has rejected three bids from Unilever for its consumer
arm, which is home to brands such as Sensodyne toothpaste,
Emergen-C vitamin supplement and Panadol painkiller, saying the
bids "fundamentally undervalued" the business and its prospects.
It has said it would stick to its plan to separately list
the business in mid-2022 and issued improved financial
assumptions for the unit.
Unilever said in a statement it had noted these but
"determined that it does not change our view on fundamental
value. Accordingly, we will not increase our offer above £50
bln".
A spokesperson for GSK responded that the firm, in which
U.S. drugs company Pfizer owns a 32% stake, was strongly
focused on maximising shareholder value and very confident in
the future of the business and its potential.
"The Consumer Healthcare business has an exceptional
portfolio and offers existing and prospective shareholders a
highly attractive financial profile supporting investment and
future returns," they added.
In a statement rebuffing Unilever's overtures last weekend,
GSK said the bid failed to capture the unit's potential,
releasing new forecasts that projected annual organic sales
growth of 4%-6% for the business, which made sales of 9.6
billion pounds last year, over the medium term.
This estimate was above its prior forecast of seeking to
beat the consumer health market's growth of about 4%.
The British drug maker said it intends to further share
details of its strategy for the consumer brands unit at an
investor day on 28 February.
The event would follow its fourth-quarter results on 9
February where it might also throw some light on its thinking.
Unilever's decision not to raise its bid comes after analysts
and investors widely panned its offer, sending shares in the
maker of Dove soap down 8% on Monday, on worries about the
financial implications for the company.
A source familiar with Pfizer's strategy told Reuters
earlier this week that GSK and Pfizer would open negotiations
with Unilever's boss Alan Jope if the consumer goods giant was
ready to improve its bid to more than 60 billion pounds.
($1 = 0.7337 pounds)
(Reporting by Siddharth Cavale, Aby Jose Koilparambil in
Bengaluru and Ludwig Burger in Frankfurt; Editing by Devika
Syamnath, Alexandra Hudson)
Glaxosmithkline (GSK)
Unilever (ULVR)
