Unilever makes £50bn bid for GSK’s consumer business

Unilever has made an unsolicited £50bn bid to snap up Glaxo Smith Kline’s (GSK) consumer goods business.

The FTSE 100 listed maker of Marmite, Ben & Jerry’s and PG Tips made the approach for a portfolio of GSK’s household brands including Sensodyne toothpaste and Panadol painkillers last year, The Sunday Times first reported.

The board of GSK and drugs giant Pfizer, which owns a minority stake in the division, reportedly rebuffed the offer for being too low.

A spokesperson for Unilever confirmed new of the approach to City A.M.. The spokesperson said “GSK Consumer Healthcare is a leader in the attractive consumer health space and would be a strong strategic fit as Unilever continues to re-shape its portfolio.

“There can be no certainty that any agreement will be reached,” the spokesperson added.

While analysts gave the company a recent valuation of £48bn based on sales growth of approximately three per cent over the last few years GSK is understood to be angling for a higher valuation and will have an opportunity to talk up its prospects at a capital markets day in March. The FTSE 100 listed pharmaceuticals company is expected to promise that its consumer products will deliver sales growth of four per cent, above the sector average.

News of the approach comes as both GSK and Unilever face pressure from investors over performance.

GSK is in the process of splitting in two while fending off pressure from activist investors at Elliott Management and Bluebell Capital which have called for chief executive Emma Walmsley to resign. The new company would be led by GSK insider Brian McNamara and its board is due to be chaired by Dave Lewis, the former Tesco chief executive according to reports.

Under chief executive Alan Jope, who took over from Paul Polman in 2019, Unilever has seen its share price decline approximately five per cent leading to pressure from investors.

Read more: Fund manager says Unilever has ‘lost the plot’ with focus on purpose over profit