Unilever to pursue GSK-Pfizer unit despite rebuff to £50bn bid

Consumer goods giant Unilever on Monday revealed ongoing interest in a consumer health care unit owned by pharmaceutical groups GlaxoSmithKline and Pfizer after a bid of £50 billion was refused.

British group GSK said at the weekend that it had received three unsolicited offers from Unilever for GSK Consumer Healthcare, but were rejected for being too low.

The unit's products include Sensodyne toothpaste, pain relief drug Panadol and cold treatment Theraflu.

"GSK Consumer Healthcare would be a strong strategic fit," Unilever said in a statement as it unveiled a strategy update in the wake of the weekend's takeover news.

"Unilever's future strategic direction lies in materially expanding its presence in health, beauty and hygiene," it said.

"These categories offer higher rates of sustainable market growth, with significant opportunities to drive growth through investment and innovation, and by leveraging Unilever's strong presence in emerging markets."

The latest bid was received on December 20 for a total acquisition value of £50bn, comprising £41.7bn in cash and £8.3bn in Unilever shares.

GSK owns a majority 68 percent of the unit with US giant Pfizer the remainder.

"The board of GSK unanimously concluded that the proposals were not in the best interests of GSK shareholders as they fundamentally undervalued the consumer healthcare business and its future prospects," said a statement at the weekend.

The consumer health care business had annual sales of £9.6 billion last year.

"As a result of the reporting of Unilever's interest in GSK Consumer Healthcare, we are today bringing forward a planned update, setting out the strategic direction that the company is pursuing," Unilever said.

In its strategic update, Unilever said "major acquisitions should be accompanied by the accelerated divestment of intrinsically lower growth brands and businesses. This would provide funding."

Purchase of the GSK-Pfizer unit "would create scale and a growth platform for the combined portfolio in the US, China, and India, with further opportunities in other emerging markets", Unilever added.

Unilever in November agreed to sell its global tea business, including brands Lipton and PG Tips, for €4.5bn (£3.75bn).