(Bloomberg) — GlaxoSmithKline Plc rejected an offer from Unilever Plc for its consumer health care unit last year, according to people familiar with the matter.
Unilever Plc confirmed the approach in a statement on Saturday, saying the Glaxo unit would be a “strong strategic fit” as the group reshapes its portfolio.
With analysts valuing the business at as much as 48 billion pounds ($66 billion), any offer from Unilever would likely have to include a premium over that level, as well as a consideration of synergies, to tempt Glaxo away from a spin-off plan that is already at an advanced stage. The Times first reported on the Unilever offer Saturday.
The dental business is the main draw in Glaxo’s consumer portfolio, offering the biggest growth as almost all other businesses and brands are either losing momentum or growing slowly, the people said, asking not to be identified as the information is private.
Glaxo CEO Emma Walmsley has been under pressure, including from activist shareholders like Elliott Investment Management, to be more open to a sale of the consumer division. The company hired former Tesco Plc chief executive Dave Lewis in December to lead a spin-off and listing of its consumer goods arm this year.
Glaxo previously had interest from Advent International, CVC Capital Partners and KKR & Co. for the business, even as it had been preparing for the listing last fall.
Unilever Chief Executive Officer Alan Jope is also under pressure from some investors over the company’s poor performance of late. Terry Smith, the founder of Fundsmith LLP and one of Unilever’s top 15 shareholders, criticized the group this week in his annual letter to investors. He said the maker of Magnum ice-cream and Dove soap had “lost the plot” with a focus on publicly displaying sustainability credentials at the expense of focusing on the business.
Jope has continued the sustainability drive of former CEO Paul Polman. Under the two chiefs, Unilever has also reshaped its portfolio, selling slower-growing businesses such as its spreads unit and, more recently, its tea business, while acquiring Glaxo’s consumer operation in India that includes the Horlicks brand.
Nevertheless, the shares have fallen 10% over the past 12 months, which compares with a 20% gain for rival Nestle SA, where CEO Mark Schneider has taken more aggressive steps to revitalize the portfolio.
(Updates with background information throughout)
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