GlaxoSmithKline, Unilever Spar Over Future of GSK’s Consumer Health Business

GlaxoSmithKline and Pfizer will hold out for a better bid of at least £60 billion for their joint consumer healthcare venture, in opposition to an earlier offer they didn’t like, Financial Times writes.

They’re rejecting a £50 billion offer from Unilever, which GSK said was “fundamentally undervalued.” Instead the company had seen better forecasts.

GSK had been planning to spin off the unit. It owns a 68% stake in it but had been pressured to consider a sale.

Among those pressuring for the sale was Marco Taricco, co-chief investment officer with Bluebell Capital Partners.

“Based on the limited information we have so far, £50bn sounds like a floor, but it should be improved, either by Unilever or by someone else,” he said, per FT.

FT writes that a 25% premium would bolster the value of the business, pushing the bid above £60 billion. That would end up with more serious consideration from the board, according to an unnamed source – and another said it would be “hard to turn down.”

The report says that the two sides of the debate had different views on the premium offered already.

Unilever’s approach could see other suitors making their own efforts. Proctor & Gamble has been considering adding more consumer healthcare assets to its portfolio, though no offer has been made.

If there is a competitive offer for the healthcare business, it would be based on a multiple to earnings before interest, tax, depreciation and amortisation, along with synergy and premium numbers. But there would be other factors like tax and timing – a former board member said the attraction of the spinoff came from the fact that it was meant to be tax-free.

With a sale, GSK and its shareholders might both have ended up with a tax bill.

PYMNTS writes that the GSK spinoff came from help from Goldman Sachs and Citi, which also included defense from an activist campaign from Elliot Investment Management.

See also: GlaxoSmithKline Plans Spinoff of Consumer Healthcare Unit

The company was reported mid-2021 to be planning to keep as much as 20% of the business, planning to sell at another time.