Despite Rebuff, Unilever Still Wants To Buy GSK Consumer Arm

Unilever signaled on Monday that it would pursue a deal for GlaxoSmithKline's (GSK) consumer healthcare business, calling it a "strong strategic fit" but its shares fell more than 7%, highlighting investors' doubts about its 50-billion-pound ($68.4 billion) offer.

Photo Insert: Unilever building in Rotterdam

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, Pushkala Aripaka, Keith Weir and Pamela Barbaglia reported for Reuters.

GSK, led by boss Emma Walmsley, has hired Goldman Sachs and Citigroup to review Unilever's approach but it will not engage in talks unless Unilever bumps up its offer, sources familiar with the matter said. GSK's shares jumped 5% in early trading to their highest level since May 2020.

GSK said on Saturday Unilever's proposal "fundamentally undervalued" the business, 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 for the GSK consumer business, in which US drugs company Pfizer owns a 32% stake.

"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," Unilever said, pointing to synergies in the oral care and vitamin supplements business.

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, a source familiar with Pfizer's strategy said.

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