GlaxoSmithKline rejected an offer from Unilever for the drugmaker’s consumer healthcare unit last year that valued the business at about £50 billion ($68bn), according to people familiar with the matter.
Unilever confirmed the approach in a statement on Saturday, saying the Glaxo unit would be a “strong strategic fit” as the owner of Ben & Jerry’s ice cream and Dove soap reshapes its portfolio.
Unilever is still interested and could return with a fresh bid, although no final decision has been made, said the people. Glaxo’s board is open to all proposals but the bid was not within a range it would consider, they said, adding that a spin-off of a business that includes brands such as Sensodyne toothpaste and Advil painkillers remains the preference.
A potential takeover would rank among the top deals globally since the beginning of the coronavirus pandemic, and comes at a time when mergers and acquisitions activity is at an all-time high. A deal would speed the transformation of two of the UK’s biggest companies, each of which is facing shareholder pressure to improve performance.
With analysts valuing the Glaxo consumer business at as much as £48bn, any offer from Unilever would likely have to include a significant premium over that level, as well as a consideration of synergies, to tempt Glaxo away from the spin-off plan, which is already at an advanced stage.
The dental business is the main draw in Glaxo’s consumer portfolio, offering the biggest growth as almost all other businesses and brands are either losing momentum or growing slowly, the people said. The consumer health unit took on its current shape in 2019 after a deal with Pfizer, which retains a minority stake.
Glaxo chief executive Emma Walmsley has been under pressure from shareholders, including activist fund Elliott Investment Management, to be more open to a sale of the consumer division as it seeks to revitalise the core pharmaceutical business.
GlaxoSmithKline rejects $68 bn Unilever offer
January 16, 2022