Unilever had offered £41.7billion in cash and £8.3billion in its shares to GSK. In a statement, the Anglo-Dutch consumer goods giant said it will not go above £50billion as doing so would not represent good value.
Instead, it will look to continue to improve the performance of its diverse existing brands, which include Pot Noodle, Dove, Ben & Jerry’s, Domestos and Knorr.
The statement added: “We note the recently shared financial assumptions from the current owners of GSK Consumer Healthcare and have determined that it does not change our view on fundamental value. Accordingly, we will not increase our offer above £50billion.”
Bruno Monteyne, senior analyst at broker Bernstein, said that Unilever’s management’s decision had saved it a fight with its own shareholders.
They are believed to harbour concerns about the price, size and complexity of the deal.
“No investor backs this bid. Yes, some agree on the direction and agree on material synergies, but we believe the potential price and complexity scares even them,” he said.
GSK owns 68 percent of the healthcare business, while rival Pfizer owns the rest.
And it plans to spin off the business or float it on the stock market next year.
It said that the business’s growth rate, high levels of cash generation and capacity to grow both sales and its margins, meant that spinning it off would produce a better return for investors than a sale to Unilever.
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