Unilever faces rising investor backlash against GSK’s £ 50 billion bid for consumer health as stock prices fall to their lowest levels in nearly five years.
One of Unilever’s top 20 shareholders told the Financial Times:
“Unilever’s management has a lot to prove,” said top 15 investors to show investors that the proposed acquisition is “not a sign of despair.”
“I need a lot of convincing about how and why they think they can justify it, raise money and use it to provide value to shareholders.”
Unilever’s share price first fell 7% on Monday after news of an offer to the GSK consumer business was reported over the weekend. GSK’s share price has risen by about 4%.
GSK and Pfizer, which hold a 32% stake in the consumer health sector, Improved offer of at least £ 60 billion..
Unilever CEO Alan Jope did not comment on how ready the company was to bid.
“Unilever, rest assured that we will not overpay for our assets, especially in situations where GSK’s consumer health is a very attractive option in the area of consumer health. That’s not the only option, “he said.
Johnson & Johnson, the world’s largest healthcare company, is also planning to spin off the consumer sector.
Unilever defended the GSK unit’s move by saying that businesses that include brands such as Aquafresh toothpaste and Panador painkillers are “strong strategic fits.”
“This acquisition creates a scale and growth platform that combines portfolios from the US, China and India, and opens up additional opportunities in other emerging markets,” he said.
Saturday’s GSK said Unilever’s £ 50bn offer “fundamentally underestimates” businesses intended to spin off later this year.
Some GSK shareholders were also skeptical. Royal London Asset Management, GSK’s top 25 shareholder, said:
Richard Buxton of Jupiter Capital Management, GSK’s top 30 shareholder, said there was no price to sell to Unilever on Sunday. “The idea of letting Unilever’s villains run it is funny.”
Jope replied on Monday, “I wouldn’t indulge in the name call.”
Unilever’s chief said the weekend deal leak occurred out of context and emphasized that it would involve a sale in low-growth areas. But he didn’t elaborate on which business the company would sell.
Unilever said it would maintain its A-band credit rating and maintain “financial discipline,” including plans to rapidly reduce leverage over three to four years.
People familiar with the situation said the group still wants to pursue a deal with GSK.
Jope, who has led Unilever since early 2019, is under pressure to improve performance and stock prices that lag behind rivals.
FTSE 100 companies are facing growing investor dissatisfaction with their growth-boosting strategies. attack Last week from top 10 shareholder Terry Smith.
Unilever said it would launch “a major initiative to improve performance” this month, including structural changes.
Consumer goods analysts have announced reservations for the potential acquisition of GSK and Unilever’s debt.
James Edwards Jones of RBC Capital Markets said: Even serious consideration of such bids casts doubt on management’s confidence in the current business. “
Bruno Monteyne, an analyst at Bernstein, said the deal would involve “a £ 10 billion disruption of shareholder value.” He added that Unilever’s management was “just ridiculous” to consider the bid, and shareholders saw it as a “desperate move.”
“The first feedback from investors over the weekend was almost uniformly negative,” said Martin Debou, an analyst at Jeffreys.
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