(FT) Unilever has come out to defend the much criticized 50-billion-pound acquisition of GlaxoSmithKline consumer health unit, calling it a “strong strategic fit.”
The company says the acquisition will build a scale and growth platform for the combined portfolio in China, India, and the US, with additional opportunities in emerging economies.
Unilever says it would dispose of lower growth brands and businesses, with the latest addition setting it to establish a grip in beauty, health, and hygiene.
The latest comments by Unilever comes amid criticism over the acquisition which has sent its shares down more than 7% on Monday. The consumer products brand still wants to pursue the deal.
Unilever CEO Alan Jope is under pressure to boost the company’s share price and performance after lagging rivals. Investors are also discontent over the company’s existing growth strategy.
GSK and Pfizer, which controls about 32% of stake in the consumer health unit, still wants Unilever to up the deal to at least 60 billion pounds, citing the current offer as “fundamentally undervalued.”
RBC Capital Markets analyst James Edwardes-Jones says the deal carries very little justification operationally, strategically, and financially. Bernstein analyst Bruno Monteyne says the deal could cause 10-billion-pound destruction of shareholder value.
ULVR: LON is down -7.49%, GSK: LON is up +3.09%.
