Unilever to expand health and beauty business after failed GSK approach

theguardian.com:

Unilever has pledged to grow its health, beauty and hygiene business and sell slower-growing operations as investors dumped its shares after its failed £50bn approach for GlaxoSmithKline’s consumer products arm.

GSK rejected three Unilever bids for the consumer products arm it is seeking to spin off, the last of which was worth £50bn. The pharmaceutical company on Saturday said that the offer “fundamentally undervalued” the business, which owns brands including Panadol pain relief and Sensodyne toothpaste.

Unilever shares dropped by 7% on Monday morning, making it the biggest faller on the FTSE 100. GSK shares rose by as much as 5%, putting it among the biggest UK blue-chip gainers as investors appeared to bet that a higher bid would materialise.

Unilever, the owner of brands ranging from Dove soap to Marmite, has been under pressure in recent months under the leadership of the chief executive, Alan Jope. Its share price was almost a quarter below its record 2019 high before the bids were revealed.

GSK plans to demerge the consumer healthcare business by the middle of the year, and the former Tesco boss Sir Dave Lewis has been lined up to chair it. Some analysts have estimated GSK may be looking for as much as £60bn for a takeover.

GSK Consumer Healthcare would be a “strong strategic fit”, Unilever said on Monday. Unilever highlighted GSK’s oral care brands, which include Aquafresh toothpaste, as well as its vitamins, minerals and supplements brands such as Centrum and over-the-counter medicines.

Jope said the company would be “a very attractive option” for Unilever but added “it’s not the only option”.

He emphasised that Unilever would fund the health, beauty and hygiene push by selling slower-growing businesses rather than