Unilever is not going to elevate rejected 50 billion pound bid for GSK shopper arm By Reuters

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©Reuters. FILE PHOTO: The logo of Unilever in Rotterdam, the Netherlands August 21, 2018. REUTERS/Piroschka van de Wouw

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(Reuters) – Unilever (NYSE:) PLC effectively abandoned its plans to buy GlaxoSmithKline’s (NYSE:) consumer healthcare business on Wednesday, saying that it has accepted its £50 billion ($68 billion) offer, that GSK had previously rejected would not increase.

US-listed shares of Unilever rose 10.1% on the news, while GSK fell 2.8%. The two stocks are also traded on where the day trading closed.

GSK has rejected three bids from Unilever for its consumer division, which is home to brands including Sensodyne toothpaste, Emergen C vitamin supplement and Panadol pain reliever, saying the bids “fundamentally undervalue” the business and its prospects.

It has said it will stick to its plan to list the company separately in mid-2022 and has issued improved financial assumptions for the entity.

Unilever said in a statement it has taken note of these but is “determined that it will not change our view of fundamental value. Accordingly, we will not increase our supply above £50bn.”

A spokesman for GSK responded that the group has a strong focus on maximizing shareholder value and is very confident about the future of the consumer healthcare business Pfizer (NYSE:) owns a 32% stake.

“The Consumer Healthcare business has an exceptional portfolio and offers existing and potential shareholders a highly attractive financial profile that supports investments and future returns,” they added.

In a statement dismissing Unilever’s bids last weekend, GSK said the bid hadn’t realized the unit’s potential and released new guidance that projected 4% to 6% annual organic revenue growth for the company , which last year had sales of £9.6 billion in the medium term.

That estimate was ahead of the previous forecast of outperforming the consumer healthcare market’s growth of about 4%.

The British drugmaker said it intends to reveal more details of its strategy for its consumer brands business at an investor day on February 28.

The event would follow the fourth-quarter results on Feb. 9, where it could also shed some light on his reasoning.

Unilever’s decision not to increase its bid comes after analysts and investors scrutinized its bid and sent shares of soapmaker Dove down 8% on Monday on worries about the financial impact on the company.

A source familiar with Pfizer’s strategy told Reuters earlier this week that GSK and Pfizer would start negotiations with Unilever boss Alan Jope if the consumer goods giant were willing to upgrade its offering to more than £60bn.

(Corrects January 19 story to make it clear that Pfizer is involved in consumer healthcare business, paragraph 6)

($1 = 0.7337 pounds)

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