Glaxo Unit Valuation Boost Looks Less Likely as Unilever Walks -- Market Insight
January 21 2022 - 11:54AM
Dow Jones News
Commentary by Adrià Calatayud
Unilever's unwillingness to increase its offer for
GlaxoSmithKline's consumer-healthcare business beyond the around
$68 billion that were rejected as too low might temper expectations
at the pharmaceutical company over the valuation potential buyers
would be ready to pay.
Glaxo last year set out plans for a demerger of the business in
mid-2022, but activist hedge fund Elliott Management in July urged
the company to explore a sale rather than a spinoff.
Glaxo, which has a 68% stake in the unit with the remaining 32%
owned by Pfizer, said Unilever's proposals fundamentally
undervalued the business and its future prospects.
Unilever's decision to effectively walk away from the deal came
after facing strong pushback from its own investors when the
approach became public, which suggests not all market players share
Glaxo's views on how much the business is worth.
Procter & Gamble, which had been cited by analysts as a
potential suitor for Glaxo's consumer-healthcare business along
with Reckitt Benckiser and Nestlé, ruled itself out when CEO Jon
Moeller said Wednesday that the company didn't need big
acquisitions.
Analysts at Berenberg earlier this week said Unilever's bid
valued Glaxo's consumer business at 19.8 times its forecast Ebitda
for 2021, a 15% premium to the average in the household and
personal-care goods industry. S
Shares in Glaxo closed 1.8% lower in London Thursday, erasing
their gains earlier in the week on news of Unilever's approach.
Market Insights are commentary that is independent of the news
coverage by reporters at The Wall Street Journal.
Write to Adrià Calatayud at adria.calatayud@dowjones.com
(END) Dow Jones Newswires
January 21, 2022 11:39 ET (16:39 GMT)
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