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Unilever’s tricky friend: Investors cheering the arrival of Nelson Peltz need to be alert to the pratfalls, says ALEX BRUMMER










The arrival of Nelson Peltz and his £6billion-plus activist Trian Partners on the Unilever share register gave its equity a rare boost.

It seems that the market has concluded that whatever chief executive Alan Jope and chairman Nils Andersen do following the failed attempt to buy Glaxosmithkline’s consumer healthcare arm is to be distrusted.

The whole purpose of Unilever’s unified London quote was to give the company more flexibility when the effort by a previous chief executive Paul Polman to hide the £100billion Dove-to-Ben & Jerry’s group away in Rotterdam was rejected.

Activist: Hedge fund boss Nelson Peltz has given Unilever's share price a much-needed boost after buying an undisclosed stake through his Trian Partners hedge fund

Activist: Hedge fund boss Nelson Peltz has given Unilever’s share price a much-needed boost after buying an undisclosed stake through his Trian Partners hedge fund

Unilever’s share price performance is regarded as lacking the pizzazz of peers such as Nestle and another Peltz target Proctor & Gamble. 

In contrast to some competitors, Unilever has appeared more concerned with a social and climate change agenda than immediate shareholder returns.

Some of its key products look out of kilter with these woke times. But it is worth remembering that Marmite, perhaps its most recognised British brand, is a breakfast favourite built on the recycling of brewing extracts.

Moreover, whereas as some investors want to see immediate improvements in sales, earnings and the share price Unilever’s adoption of ESG principles may be more in line with where longer term investment opinion is moving.

Aviva Investors, which manages £262billion of funds, has just signalled that it is prepared to get rid of directors who don’t get behind climate change, human rights and diversity. M&G and Legal & General are on much the same page.

So what should we make of Peltz’s involvement? Be careful what you wish for. His most brazen involvement in UK public markets left scar tissue. 

As a big investor in Cadbury, Peltz campaigned initially for the spin-off of its soft-drinks arm. Britain’s landmark Schweppes brand never really recovered, creating space for newcomers Fever Tree among others.

Cadbury as a standalone found itself vulnerable to the attentions of Kraft, and with the support of hedge funds lost its independence in 2010 in a bitterly fought £14billion hostile battle.

A UK factory for the Wispa bar was closed. Contrary to undertakings made, the tax domicile moved to Switzerland and even the formula for the Creme Egg was altered.

The deal was bad for Cadbury colleagues – a distinctive UK brand – HMRC and command and control of the UK economy.

Those investors cheering Peltz’s arrival need to be alert to the pratfalls.

Tech check

The convulsions on financial markets are a reminder to investors to keep a weather eye on macro-economic and global events.

The surge in inflation and energy prices has been evident for months. But there was a slow realisation that central banks would finally be brave enough to remove the punch bowl. 

Anxiety created by the end of monetary largesse has been exacerbated by events in the Ukraine and the potential impact on energy supplies.

Hard hit have been fashionable tech and lockdown shares, with Peloton and Netflix at the sharp end, contributing to the subsidence on Nasdaq. 

In the UK, the effort to create a more friendly environment for tech initial public offerings looks fragile. 

The downward journey for The Hut Group (THG), burdened from the outset by a governance deficit, shows no sign of abating as growth prospects disappear into the distance, sparking a further 19.9 per cent fall.

The float of cyber-security outfit Darktrace was overshadowed by its association with former Autonomy boss Mike Lynch who is under the threat of extradition to the US. 

There was a double digit fall in latest trading. Fintech firms Wise and Pension Bee have also been caught up in the carnage.

Even cult boot maker Dr Martens, which embraced on-line selling, is suffering.

As the era of cheap money and home working ends so do the extravagant forward projections of the tech-set.

Life changing

Unlocking the embedded value of India’s economy has long been delayed.

Prime Minister Narendra Modi looks ready to uncork some free market capitalism with the proposed £147billion float of state-owned Life Corporation of India which has assets of £376billion, 290m policyholders and 1.3m of old-style Pru agents prowling every city, town and village. 

Providing it is not derailed by a global equities correction, it should be quite an Aramco-style event.

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Unilever roars back to life as billionaire activist hedge fund boss Nelson Peltz grabs stake










Unilever shares roared back to life as investors welcomed an activist hedge fund taking a stake in the company.

Shares in the Hellmann’s and Marmite maker jumped 7.3 per cent, or 268.5p, to 3943.5p.

The FTSE 100 giant’s value swung back above £100billion for the first time since its failed takeover of Glaxosmithkline’s consumer health arm.

Billionaire Nelson Peltz (pictured) was revealed to have built a stake in Unilever through his New York-based hedge fund Trian Partners

Billionaire Nelson Peltz (pictured) was revealed to have built a stake in Unilever through his New York-based hedge fund Trian Partners

The rise came after billionaire investor Nelson Peltz was revealed to have built a stake in the company through his New York-based hedge fund Trian Partners.

It is unknown how big a stake Trian has built, but it usually takes positions of between 1 per cent and 3.5 per cent. 

That would make the asset management firm one of Unilever’s five biggest shareholders.

It is believed the £6.3billion hedge fund started buying shares before Unilever’s bids for GSK consumer health were revealed. 

But analysts said it would pile further pressure on Unilever chief executive Alan Jope, whose leadership was questioned over the failed £50billion takeover attempt.

Jefferies analyst Martin Deboo said Trian’s involvement will ‘increase the pressure’ on Jope and the board. 

Unilever’s shares crashed as much as 10 per cent last week as analysts and investors roundly rejected the deal. 

Two major Unilever shareholders publicly questioned Jope’s leadership over the GSK approach.

Terry Smith – whose Fundsmith fund owns 0.8 per cent of Unilever – called the saga a ‘near death’ experience and raised questions over the quality of Unilever’s management. 

Smith said Unilever bosses – ‘or someone else if they don’t want the job’ – should focus on fixing the existing business before looking to buy others.

And investment manager Flossbach von Storch, which owns 1 per cent of the company, also urged Jope to stick to improving performance rather than chasing costly deals. Jope has also been heavily criticised for Unilever’s sales and share price growth.

Trian is renowned for pushing strategic and governance changes at companies it is involved in and its involvement helped shares claw back last week’s losses.

Deboo said the hedge fund has a ‘long and successful track record’ of unlocking value at companies through splits and spin outs.

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Activist hedge fund takes a stake in Unilever as speculation swirls that it is becoming a takeover target

  • Trian Partners has reportedly built up a position in the consumer goods giant 
  • The size of the stake has not been disclosed 
  • Trian’s arrival will ratchet up pressure on Unilever boss Alan Jope 










An activist hedge fund has taken a stake in Unilever as speculation swirls that it is becoming a takeover target. 

New York-based Trian Partners, run by billionaire Nelson Peltz, has reportedly built up a position in the consumer goods giant, which makes Dove soap and Hellmann’s mayonnaise. 

However, the size of the stake has not been disclosed. 

Takeover target?: New York-based Trian Partners, run by billionaire Nelson Peltz, has reportedly built up a position in Unilever

Takeover target?: New York-based Trian Partners, run by billionaire Nelson Peltz, has reportedly built up a position in Unilever

Trian has a reputation for demanding strategic and governance changes from companies it is involved in. 

It also has experience in the consumer goods sector, having targeted Cadbury’s owner Mondelez and Proctor & Gamble. 

Trian’s arrival will ratchet up pressure on Unilever boss Alan Jope, who was criticised following an abortive attempt to buy the consumer healthcare arm of pharma giant GlaxoSmithKline (GSK). 

Revelations of the £50billion bid triggered a sharp drop in Unilever’s share price, which fell nearly 7 per cent last week, forcing Unilever to effectively abandon its pursuit. 

Shareholder criticism continued to pile up and UK stock-picker Terry Smith – whose Fundsmith fund owns 0.8 per cent of Unilever – said he was ‘thankful’ that the bid was ‘dead’. 

The fund manager added that the saga was a ‘near-death’ experience and raised questions over the quality of Unilever’s management. 

Meanwhile, Bert Flossbach, the owner of investment group Flossbach von Storch, which holds a 1 per cent stake in Unilever, urged Jope to stick to improving performance rather than chasing costly deals. The speculation that Unilever itself could become a takeover target is providing an ironic twist to the saga. 

Cranley McFarlane, of EF Tellsons Endeavour Fund, said: ‘What does it say about Unilever’s current outlook that management felt they needed such a large, transformative acquisition to improve it?’ 

He noted that it was not unusual for the firm to be a takeover target, with Unilever having fought off a private-equity backed bid by KraftHeinz in 2017. 

‘After this episode, they could well become one again,’ McFarlane added. 

Unilever’s leadership could also be in doubt following the flopped GSK bid, with Bernstein analyst Bruno Monteyne having questioned whether the incident would trigger a change in management.

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One of Unilever’s most powerful shareholders breaks ranks to deliver stark warning to Marmite owner’s boss that his job is hanging by a thread










One of Unilever’s most powerful shareholders has broken ranks to deliver a stark warning to the Marmite owner’s boss that his job is hanging by a thread. 

Bert Flossbach – owner of investment group Flossbach von Storch which holds Unilever stock worth £1.25billion – urged chief executive Alan Jope to stick to improving performance rather than chasing costly deals. 

Jope was criticised after revelations he repeatedly tried to buy a £50billion arm of rival GlaxoSmithKline. Shares in Unilever plunged after it emerged last weekend the FTSE100 company tried three times to acquire GSK’s consumer division, including Sensodyne and Panadol. 

Swoop: City sources said that private equity firms, said to include KKR, are now circling Unilever with a view to picking off parts

Swoop: City sources said that private equity firms, said to include KKR, are now circling Unilever with a view to picking off parts

The audacious bid by Unilever, which makes products including Ben & Jerry’s ice cream and Hellmann’s mayonnaise, sparked a fierce backlash from investors. 

City sources told The Mail on Sunday that private equity firms, said to include KKR, are now circling Unilever with a view to picking off parts. 

Flossbach – Unilever’s 12th largest shareholder – likened the disastrous bid to Reckitt Benckiser’s much-criticised takeover of Mead Johnson in 2017. Flossbach told The Mail on Sunday: ‘Unilever should stay focused on their core competence, which is not [over the counter] pharmaceuticals.

‘Reckitt Benckiser’s acquisition of Mead Johnson Nutrition showed the risks of leaving your circle of competence. In the end, it cost the CEO his job.’ 

Reckitt Benckiser, which sells Dettol and Durex, saw £10billion written off the baby formula company Mead Johnson which it had bought for $17billion (£12.5billion). 

Chief executive Rakesh Kapoor ended up retiring. 

Fund veteran Terry Smith also called on the group to focus on its own performance before embarking on a large acquisition. Smith, who stopped short of calling for Jope’s head, described the proposed deal as a ‘near death experience’. 

Several major investors told The Mail on Sunday they met privately with Unilever last week and expressed concerns about the takeover attempt. 

But some analysts said Jope should not be singled out, pointing to the board and senior bankers at Deutsche and Centerview Partners who were advising on the deal. 

During the investor meetings, it is understood Jope explained which divisions have been earmarked for growth through acquisitions – including beauty, pet care and consumer health care.

He said they saw an opportunity to buy GSK’s consumer businesses as part of that strategy. Unilever declined to comment. 

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Terry Smith has taken a second pop at Unilever in as many weeks, accusing its bosses of playing ‘gin rummy management’.

The stockpicker, who looks after more than £33billion of savers’ money through his firm Fundsmith, said he was ‘thankful’ that the company’s £50billion bid for the consumer arm of GSK was now ‘dead’.

The fund manager said the whole sorry saga, which entailed the consumer goods giant being repeatedly rebuffed by GSK, was a ‘near-death’ experience, raising serious questions over the quality of the Marmite-maker’s management, including chief executive Alan Jope.

In the ring: Fund manager Terry Smith (pictured) said he was 'thankful' that Unilever's £50bn bid for the consumer arm of GSK was now 'dead'

In the ring: Fund manager Terry Smith (pictured) said he was ‘thankful’ that Unilever’s £50bn bid for the consumer arm of GSK was now ‘dead’

In a devastating analysis, which Smith titled a ‘post-mortem’ into the flopped deal, he said bosses should consider whether they – rather than the business – were the problem.

Borrowing a phrase from the legendary US investor, he said: ‘The management seems to be playing what Warren Buffett lampoons as ‘gin rummy’ management.’ He added that they should consider whether the problem was not with the hand of cards but with the player, in a dig at Unilever’s bosses.

His criticism came after the business made three separate bids to acquire GSK’s consumer arm, which makes Aquafresh toothpaste and Panadol painkillers.

Unilever said the move was part of its plan to move into selling more beauty products, while potentially selling its food and refreshment business which includes brands such as Marmite and Hellmann’s mayonnaise.

GSK had been pushing for more money, but on Wednesday Unilever said it was drawing the line at £50billion, effectively abandoning the bid.

Smith, however, suggested the deal should never have got that far. The 68-year-old, who is one of the best-known names in Britain’s investment industry, criticised Unilever for failing to show any analysis of how it intended to make a strong return on its £50billion investment.

On Smith’s estimates, the company would have needed to significantly improve the performance of GSK Consumer to avoid destroying the value of the cash it pumped in. 

And getting Unilever to disclose its calculations ‘was like a dentist pulling a back tooth’, he added, claiming the firm had a ‘penchant for corporate gobbledegook’.

Smith, who is based in Mauritius, also raised concerns that Unilever’s decision to switch its focus to beauty was misplaced.

Under fire: Unilever chief executive Alan Jope (pictured). The firm has made three separate bids to acquire GSK's consumer arm

Under fire: Unilever chief executive Alan Jope (pictured). The firm has made three separate bids to acquire GSK’s consumer arm

Few conglomerates had achieved success in the sector, he said, pointing to Proctor & Gamble’s move to assemble a bunch of beauty brands before selling them to US giant, Coty.

His comments come as Bruno Monteyne, a Bernstein analyst, questioned whether there would have to be management changes at company after the failed bid.

Monteyne said investors had expressed disbelief over the bid adding that it wreaked of desperation and he believes there will be changes at board level over the next few months.

He added: ‘Given the performance of the business over recent years; given this sudden change in strategy and the shareholder refusal to back one of the key pieces of the plan, we think management has lost credibility. 

We would expect management and board change to be the key topics for the next three to months.’

But Smith’s issues with Unilever go back much further than its recent failed attempt to buy GSK, as he pointed out it had performed much more poorly than its rivals over the past decade.

Lashing out at the company’s communications, he said: ‘Against the background of this miserable performance the company did not even attempt to contact us for the first eight years we were shareholders.’

It was the second outburst from Smith in as many weeks.

Last week he blasted the company for being ‘obsessed’ with its sustainability credentials – to the detriment of its financial performance. The stock-picker said Unilever had ‘lost the plot’ over trying to define some of its brands like Hellmann’s mayonnaise.

In his annual letter to investors in his Fundsmith Equity fund, Smith said: ‘A company which feels it has to define the purpose of Hellmann’s mayonnaise has clearly lost the plot.

‘The brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert – salads and sandwiches).’

He also blasted its refusal to supply Ben & Jerry’s ice cream in the West Bank, as sales ‘in the Occupied Palestinian Territory’ were ‘inconsistent with our values’. 

Smith said: ‘Unilever seems to be labouring under the weight of a management obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business.’

But rival fund managers disagreed with Smith’s criticism.

John William Olsen, a portfolio manager at M&G Investments, said the firm was ‘focused on running the business sustainability and explaining its strategy – something that should be demanded from any company’.

And one City investor suggested that Smith may have been using Unilever’s focus on sustainability to excuse its poor performance, when actually there were other reasons why the company was not a very canny investment.

These included features such as its lack of investment in ecommerce and direct-to-consumer businesses, the investor said.

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Unilever insists it won’t pay a penny more than £50bn for GSK’s consumer healthcare arm










Unilever effectively abandoned its pursuit of Glaxosmithkline’s consumer healthcare arm last night by insisting it would not pay a penny more than £50billion.

The consumer goods giant, whose brands include Marmite, Hellmann’s, and Ben & Jerry’s, has had three bids turned down in recent weeks.

GSK chief executive Emma Walmsley, who is planning to spin off consumer health into a separate company listed on the stock market, said even the latest bid of £50billion from Unilever ‘fundamentally’ undervalued the business.

Final offer: Unilever, whose brands include Marmite, Dove, Hellmann's and Ben & Jerry's, has seen three bids turned down by GSK in recent weeks

Final offer: Unilever, whose brands include Marmite, Dove, Hellmann’s and Ben & Jerry’s, has seen three bids turned down by GSK in recent weeks

Her company’s brands include Sensodyne, Aquafresh, Panadol and Advil.

But Unilever boss Alan Jope on Monday, insisted GSK was a ‘strong strategic fit’ and he would continue to push for a deal. Shares in Unilever tumbled, however, amid fears it would overpay.

Jope’s plans met fierce criticism in the City as investors and analysts suggested he should fix problems within Unilever rather than embark on an expensive acquisition.

Yesterday, Unilever appeared to throw in the towel, saying: ‘We will not increase our offer above £50billion.’

Sources said it was only interested ‘if the other side wants to engage at that level’.

Bruno Monteyne, analyst at City broker Bernstein, said Unilever was ‘trying to control the narrative’.

He said: ‘Rather than having the deal refused by investors it is better not to let it get to that stage. This gives them an exit, meaning it looks like it is their decision not to go any further.

‘But that is damage limitation the market will see through. Many questions will be asked in terms of how they came up with this and the valuation, what else is wrong with the business?’

But he suggested that GSK bosses may also be ‘kicking themselves’, having overplayed their hand trying to flush out a higher offer.

Unilever lost 10 per cent of its value on Monday and Tuesday – reducing its market cap from £100billion to £90billion – as investors reacted with horror to the planned deal.

But the shares bounced back 4.5 per cent, or 159p, to 3675.5p yesterday.

On Monday, Jope said Unilever was shifting its focus to high-growth health, beauty and hygiene businesses. 

He said that it would sell low-growth food businesses, which could include Marmite, to provide the funds for takeovers of beauty, health and hygiene brands.

He said that the FTSE 100 giant could even offload its entire food and refreshments business.

Analysts welcomed the shift in focus to faster-growing areas after years of stagnant sales at the group. But they questioned the value of such a huge takeover.

GSK is planning to press ahead with its plans to demerge the consumer healthcare business, which is 32 per cent-owned by Pfizer.

Its shares rose sharply on Monday on hopes that interest from Unilever could trigger a bidding war.

But they fell back 2.1 per cent yesterday.

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Unilever shares fall again as backlash against £50bn bid for Glaxo’s consumer arm continues










Unilever shares fell again yesterday as the backlash against its £50billion bid for Glaxosmithkline’s consumer arm continued.

The group saw a further £3billion wiped off its value, as shares fell 4 per cent, or 145.5p, to 3516.5p, bringing the total drop since its plans emerged to £10billion. 

The latest sell-off came as ratings agency Fitch said it could downgrade Unilever’s ‘A’ credit rating if it goes ahead with the deal.

Unilever saw a further £3bn wiped off its value, as shares fell 4 per cent, or 145.5p, to 3516.5p, bringing the total drop since its plans emerged to £10bn

Unilever saw a further £3bn wiped off its value, as shares fell 4 per cent, or 145.5p, to 3516.5p, bringing the total drop since its plans emerged to £10bn

GSK, maker of Aquafresh and Sensodyne, has rejected three bids from Unilever for the consumer healthcare business, the latest worth £50billion.

But Unilever, which makes Dove, Marmite and Ben & Jerry’s, could come back with a higher offer with analysts suggesting a £60billion bid would be needed.

Fitch said a takeover was ‘likely to raise Unilever’s debt’ to a level not consistent with an ‘A’ rating. If it was unable to reduce its debt by 2024-25 it could be downgraded to ‘BBB’, the lowest level Fitch considers ‘investment grade’.

It said the deal would need to be accompanied by the sale of other businesses to keep its debt levels under control.

Unilever chief executive Alan Jope stressed on Monday any takeovers would come alongside sales of poor performing brands.

He said the group’s pursuit of the GSK business was part of a strategy to focus on faster-growing health, beauty and hygiene brands – and further suggested Unilever could even offload its whole food and refreshments business.

But investors fear Unilever will overpay after its £50billion offer was rejected as ‘substantially undervaluing’ the business. 

GSK chief executive Emma Walmsley plans to demerge the business and list it on the stock market while maintaining a 20 per cent stake.

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Unilever sinks as critics slam its £50bn bid for GlaxoSmithKline’s consumer healthcare arm… but shares in the pharma giant rally










Unilever was forced onto the defensive after its plans to buy GlaxoSmithKline’s consumer healthcare division sent shares tumbling 7 per cent.

In a hastily convened press conference yesterday morning, the consumer group’s boss Alan Jope said the GSK business ‘would be a strong strategic fit’ his firm.

He also insisted a deal would be ‘attractive’ to shareholders having seen three bids turned down by the pharmaceuticals giant, including the most recent offer of £50billion.

In a hastily convened press conference, Unilever chief executive Alan Jope (pictured) said the GSK business ‘would be a strong strategic fit’ for Unilever

But Unilever shares fell 274.5p to 3662p, wiping £7billion off the £100billion company to leave it worth £93billion.

GSK’s consumer brands include Aquafresh, Sensodyne, Advil, Panadol, Chapstick and Centrum while Unilever owns Dove, Domestos, Marmite, Ben & Jerry’s and Hellmann’s.

Dismissing Unilever’s latest £50billion approach over the weekend, GSK said it ‘fundamentally undervalued’ the business, which is 32 per cent owned by Pfizer.

Analysts believe that Unilever will have to raise its bid to £60billion to secure a deal – a price tag many fear is too high.

Jobs at risk in shake-up 

Unilever will announce a ‘major initiative’ to streamline the business this month – raising fears over jobs.

Chief executive Alan Jope said he will scrap the company’s clunky operating model and make it more ‘simple’ and ‘agile’ to boost growth.

He did not rule out job losses when asked about the restructuring, saying only that the changes were ‘focused on growth, not cost’.

An analyst said the changes would be an opportunity to ‘reduce headcount’ but would ‘not necessarily’ mean staff would be cut.

The analyst said: ‘The idea is for them to be more agile and more relevant to local consumers and trends.

‘It could also be an opportunity to reduce headcount, but not necessarily.’

Jope said: ‘This is not driven by cost.

‘We are going to announce later this month a simple model, which is designed for speed and agility.’

Unilever has 149,000 staff worldwide.

Ends

 

‘The market has given a thumbs down,’ said Russ Mould, investment director at AJ Bell.

‘The negative share price reaction probably reflects investors’ fears that Unilever is going to come back with a higher offer and potentially pay too much.’

Such a takeover would be one of the biggest completed in London, and the biggest in the world since the outbreak of Covid.

But it would likely push Unilever’s debt pile from the current level of £19billion to well over £55billion.

Jope said attempts to buy GSK’s consumer arm were part of his strategy to pivot away from food and instead focus on faster-growing health, beauty and hygiene brands.

This will see Unilever get rid of poor performing food brands and could see Marmite sold.

Unilever could even offload its whole food and refreshments arm, though Jope stressed brands such as Hellmann’s and Ben & Jerry’s were growing well in a sign they could remain part of the company’s future.

The money from sales will be used to fund takeovers of health, hygiene and beauty brands which Unilever hopes will help turn around years of slow sales growth.

The strategy comes after recent moves by Unilever to slim down its 400-plus brand portfolio into a smaller group of market leaders.

In December 2017 it sold its spreads business which included Flora butter, and in November last year it sold its tea business including PG Tips.

But critics have called on Unilever to ‘fix its own business’ rather than take over others.

The company was last week slammed by leading investor Terry Smith who said it has ‘lost the plot’ over its focus on social issues.

Laying out his plans, Jope said GSK was not ‘the only option’ and if a deal does not go through he would pursue other consumer healthcare brands.

He said he would only pursue takeovers which are ‘value creating’ and they would come on top of ‘improving the performance of Unilever’s existing business’.

But his defence of Unilever’s interest in GSK failed to win over doubters in the City.

Bruno Monteyne, senior analyst at Bernstein, said it was ‘mind-blowing’ that Unilever thought such a big deal would benefit shareholders.

Monteyne also said the fact Unilever is planning further deals if it does not buy GSK consumer health is ‘really worrying’.

He said: ‘They have lost touch with reality with what investors think is credible and what the industry has known to work and not work.

‘Even of people who like Unilever shares, not a single one thinks this kind of deal the size of GSK makes any sense. It’s way too big. 

There is plenty of academic research and anecdotal evidence that mega big deals extremely rarely work, why does Unilever think with their track record in the industry they will buck the trends?’

Investors bet on Glaxo bidding war 

GlaxoSmithKline shares rose as investors bet on a bidding war for its consumer healthcare arm.

GSK boss Emma Walmsley is spinning off the division – whose brands include Aquafresh, Advil and Chapstick – into a standalone company listed on the stock market in London.

She will then focus on developing cutting edge pharmaceuticals at GSK while keeping a 20 per cent stake in the new consumer business.

But Unilever looks set to have sparked a bidding war having already seen three offers rejected, including one worth £50billion.

Other consumer health firms are thought to be looking at making rival bids while private equity is also understood to be circling.

Advent International, CVC Capital Partners and KKR have all shown an interest in the firm.

The prospect of a bidding war sent GSK shares up 4.1 per cent, or 66.8p, to 1707.8p, valuing the whole company at £86billion.

Walmsley must decide whether to press ahead with her original plan to demerge and list the new business, or hold out for a higher offer from Unilever or another bidder.

It is thought a price tag of £60billion could tempt GSK to sell.

Walmsley has faced pressure from activist investors Elliott Management, which wants a full sale of the business.

But Richard Buxton, a fund manager at long-term GSK investor Jupiter Asset Management, said she should fend off pressure from activists looking for ‘a quick buck’.

He said: ‘GSK investors should play the long game.’

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RUTH SUNDERLAND: Unilever bid for GSK’s consumer division doesn’t look compelling, but at least it has distracted attention from corporate wokery

  • Shareholders have been piling pressure on Alan Jope for better performance
  • £50bn looks like a lowball offer for the GSK business
  • Jope’s coffers don’t run to an all-cash offer, so £8bn would be in Unilever shares 










Turns out Unilever boss Alan Jope has had more on his mind than politically-correct stock cubes. 

Namely, one of the biggest deals ever contemplated on the London stock market: a £50billion bid for drugs giant GSK’s consumer health division. 

Shareholders – including Terry Smith, who last week criticised Unilever for its woke obsessions – have been piling pressure on Jope for better performance. 

Pocket money: Although £50billion is a lot, Unilever's bid nonetheless looks like a lowball offer for the GSK business

Pocket money: Although £50billion is a lot, Unilever’s bid nonetheless looks like a lowball offer for the GSK business

Few had expected a move anywhere near this audacious from Jope, who has been an underwhelming steward of the £100billion business since 2019. Over at GSK, Emma Walmsley might have a smidgen of empathy, given she has a troublesome shareholder of her own in activist investor Elliott. 

She is in the process of spinning off the consumer business, just under a third of which is owned by Pfizer, and floating it as a separate stock market company.

The idea is that GSK, once it has got rid of its Polident false teeth cleaner, Tums and Chapsticks, can concentrate its energies purely on cutting-edge pharma. The logic from Unilever’s side is that with its expertise at marketing and building brands, it can squeeze out better returns from GSK’s consumer health products. 

Great thinking: and probably why GSK has hired Sir Dave Lewis, who spent much of his career at Unilever before turning round Tesco’s fortunes, as chairman of the consumer business. 

What would be in it for GSK shareholders? In theory, a quicker exit with a chunk of cash. But it’s not that simple. Walmsley is right to reject Jope’s overtures. Although £50billion is a lot of money, it nonetheless looks like a lowball offer for the GSK business, which is valued in the market at around £45billion, with sales of £9.6billion last year and the prospect of organic sales growth of 4-6 per cent. 

It is not clear, though, whether Unilever, which has made three approaches, can afford to pay much more. In fact, it looks like quite a stretch already. 

Jope’s coffers don’t run to an all-cash offer, so around £8billion would be in dreary old Unilever shares. He would also have to make £10billion of disposals.

Both those figures would rise if the offer was hiked. 

Then there is the execution risk. To win the City’s backing for such a deal requires a lot of trust in the top team. It is not clear whether Jope can command that level of faith. 

Terry Smith didn’t want to give a view yesterday but this is a deal that might have Unilever shareholders reaching for the Panadol. For GSK investors, a sale may result in a quicker and more certain return than the proposed float. Indeed the Elliott agitators have been urging Walmsley to look at a sell-off as an alternative to the listing.

Under her plan, the GSK pharma business would keep 20 per cent of its stake in the consumer division and offload it gradually. In the meanwhile, the hope is that GSK shareholders will benefit from the growth generated from the consumer health brands. 

So its shareholders must decide whether they would prefer that, as opposed to taking cash and Unilever shares. 

Walmsley is planning to shift a chunk of debt to the consumer health business, which will pay the pharma side an £8billion dividend at the float.

In a sale, by contrast, shareholders might demand a return of capital from the proceeds that would leave GSK with less to invest in the drugs of the future. 

Unilever’s offer does not look compelling, though no doubt the publicity will flush out rivals with deeper pockets. 

If nothing else, it has distracted attention from corporate wokery.

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GlaxoSmithKline’s consumer arm could be thrust into a full-blown bidding war after rejecting three offers from Unilever at the end of last year

  • It is understood Unilever is preparing a fourth offer for the business 
  • Leading analyst says rival bids could emerge  
  • Bidding war could attract private equity firms
  • GSK boss Emma Walmsley is planning to list the consumer healthcare arm 










Sell off: GSK's Emma Walmsley (pictured) is planning to list the consumer healthcare arm

Sell off: GSK’s Emma Walmsley (pictured) is planning to list the consumer healthcare arm

GlaxoSmithKline’s consumer arm could be thrust into a full-blown bidding war after it rejected three offers from Unilever at the end of last year. 

It is understood Unilever is preparing a fourth offer for the business, which owns brands including Aquafresh toothpaste, and is being spun out from GSK this year. 

But a leading analyst said rival bids could emerge and other consumer healthcare firms would ‘do the numbers’. Bernstein’s Bruno Monteyne said Unilever should fix its own business and that the purchase is ‘a pretty bad idea’. 

He said a bidding war could attract private equity firms, but they may be turned off by the premium price after GSK rejected Unilever’s £50billion proposal. Analysts value the business at around £45billion. 

GSK chief executive Emma Walmsley is planning to list the consumer healthcare arm, which has annual sales of £9.6billion, in London, with GSK maintaining a stake. But she has come under pressure from activist investor Elliott Management to open a process to sell the unit. 

Private equity firms including Advent International, CVC Capital Partners and KKR have also eyed up the business. ‘Unilever is still in the running. You would expect other consumer health companies to do the numbers,’ said Monteyne. 

And he warned that Unilever, which makes Ben & Jerry’s ice cream and Dove soap, would continue struggling with slow growth even if it buys GSK’s consumer arm. 

He said: ‘More than 80 per cent of Unilever would still be their old business. 

‘Buying a new business isn’t going to make it more likely you fix the other 80 per cent plus of your business.’ He added that GSK is growing slowly and it will be hard for Unilever to boost sales. 

‘They should stay focused on fixing their core business.’

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