UNITED KINGDOM – Unilever has ruled out increasing its £50 billion (US$68.3 billion) bid for GlaxoSmithKline’s consumer health unit after the pharma giant turned down the latest of three approaches in December.
GlaxoSmithKline recently announced that it had rejected the £50-billion (US$68.3 billion) offer made by Unilever last month, though sources said Unilever was considering raising the bid, with one analyst speculating that as much as £60 billion (US$81.8 billion) was being floated.
“We note the recently shared financial assumptions from the current owners of [GlaxoSmithKline] consumer healthcare and have determined that it does not change our view on fundamental value,” Unilever said in a brief statement. “Accordingly, we will not increase our offer above £50 billion.”
Unilever CEO, Alan Jope announced on Monday that Unilever would shift its focus to high-growth health, beauty, and hygiene businesses.
He stated that the company would sell low-growth food businesses, such as Marmite, to raise funds for takeovers of beauty, health, and hygiene brands.
In response to Unilever’s announcement, a spokesman for GlaxoSmithKline stated that the drugmaker is optimistic about the future of the consumer healthcare business.
Meanwhile, an alternate bid for the unit appears less likely after consumer goods conglomerate Procter & Gamble, which had been mentioned as a potential buyer by some analysts, effectively ruled out an approach.
The consumer health division is a joint venture between GlaxoSmithKline, which owns 68 percent of the company, and Pfizer, which owns the rest.
The companies are in the process of separating the business, which will be led by the venture’s current CEO, Brian McNamara, who will take over as CEO once the separation takes place in mid-2022.
GlaxoSmithKline confirmed over the weekend that Unilever made three bids for the unit last year, which the UK drugmaker rejected because they undervalued the business and its prospects.
GlaxoSmithKline expects the consumer health business to deliver organic sales growth in the range of 4% to 6% over the medium term, with revenues of £9.6 billion (US$13.1 billion) in 2021.
The UK drugmaker plans to outline the investment case for the new independent consumer health company on February 28, after which it will begin the search for large cornerstone investors for the spun-off entity.
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