Unilever Makes Approach for Glaxo’s Consumer-Healthcare Business

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Company says toothpaste-to-painkiller unit will be strong strategic fit

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Glaxo plans to spin off the unit as a stand-alone company, which analysts say could be worth £45 billion, equivalent to more than $61 billion, while also saying that it will potentially be open for sale. The unit, 68% owned by Glaxo and 32% by Pfizer, sells everything from Aquafresh toothpaste to Advil pain relievers.

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Unilever approached Glaxo and Pfizer last year about a possible deal, but was declined, according to people familiar with the matter. The approach was first reported by London’s Sunday Times.

Unilever, best known for selling Ben & Jerry’s ice cream and Dove soap, already sells some healthcare products like toothpaste and supplements, but a deal would give the company a presence in over-the-counter drugs. .

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With share prices plunging over the past year, the company has come under pressure of late to revive growth and analysts say it has underperformed rivals during the pandemic in areas such as hygiene and packaged food.

To boost its performance, Unilever has sought to drop slow-growing brands and acquire businesses in more on-trend categories. For example, in November it signed a deal to sell a large part of its tea business to CVC Capital Partners, the firm that bought it for about $5 billion. Meanwhile, it has bought plant-based foods brand Vegetarian Butcher, healthy snacks maker Graze and upscale skin care and vitamin brands.

Still, Unilever’s efforts to reshape its portfolio have not been without challenges. Businesshala reported last year that it had to abandon plans to sell struggling beauty and personal care brands after failing to garner enough interest.

For Glaxo, the planned spinoff of its consumer-health care business comes as the pharmaceuticals giant is focusing more on drug and vaccine development.

Some investors, including activist hedge fund Elliott Management Corp., have urged Glaxo to consider an outright sale of the consumer business rather than a spinoff, arguing that the proceeds from any sale could be used to boost funding for R&D, debt. Can be used to pay and buy. share back.

Elliott built up a multi-billion-pound stake in Glaxo last year, according to people familiar with the matter, and set out a series of recommendations in a letter to Glaxo’s chairman over the summer. These included urging the company to consider selling the consumer unit.

Glaxo has not ruled out a sale if it considers such a transaction to be in the best interest of shareholders, although it currently plans to sell its majority stake in the business to existing investors and to list the new company’s shares in London. Is. It recently appointed a chairman and chief executive for the new stand-alone company.

Glaxo has said that this move will be tax efficient. By retaining the stake, he will have the opportunity to profit from any gains in the stock price as he seeks to sell the rest of the position over time. The consumer-health services company will also take on a disproportionate portion of the group’s debt, giving the rest of the prescription drug and vaccine business more freedom to invest.

Write Denise Roland at [email protected] and Ben Dummett at [email protected]

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