Unilever refuses to increase 50-billion-pound buyout offer for GSK consumer arm

• Analysts expect a bid of over 60 billion pounds can win the backing of GSK’s board

• GSK R&D chief Hal Barron, who oversees drug development, to step down in August

British multinational consumer goods company Unilever PLC (NYSE: UL) on Wednesday said it would not raise the 50 billion pound ($68.4 billion) bid-offer it tabled for the consumer healthcare business division of GlaxoSmithKline PLC (NYSE: GSK) in late 2021, that the UK-based drugmaker previously rejected.

U.S.-listed shares of Unilever rose over 10% on the news, while GSK’s fell 2.7%.

Late Sunday, GSK confirmed that it had rejected three separate bids from Unilever for its consumer arm, home to products like Sensodyne toothpaste, Emergen-C vitamin supplement, and Panadol painkiller.

GSK said the bids were “fundamentally undervalued” for the business and its prospects and would stick to its plan to split the pharma and consumer business to list them separately in mid-2022.

Speculations around the deal

“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,” Unilever said in a statement.

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The Dove soap maker’s statement comes after market analysts and investors widely criticized the offer, sending Unilever’s shares down 8% on Monday, worried about the financial implications for the company.

Moreover, reports emerged analysts are expecting that a bid of over 60 billion pounds can win the backing of GSK’s board, also putting Unilever under pressure to raise its offer for a deal.

If the buyout deal gets the green signal, it would be one of the largest deals ever on the London market and one of the biggest deals globally since the start of the COVID-19 pandemic.

GSK facing pressure

Glaxo is also facing pressure from the activist investor Paul Singer’s Elliott Investment Management, which has raised questions about GSK’s management team and queried whether CEO Emma Walmsley is the right person to lead the new pharma and vaccines business post-split.

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Moreover, adding to the pressure, the pharma company’s research and development chief Hal Barron, on Wednesday, announced that he would step down from the role.

Barron will hand over the role of chief scientific officer to Glaxo’s Tony Wood in August.

Picture Credit: The Guardian