(Bloomberg) — Unilever plc plans to focus more on health and hygiene and divest its slow-growing brand as it considers increasing its bid for consumer unit GlaxoSmithKline Plc.

The owner of the Dove soap said Monday that it would announce renovations to its structure by the end of this month. The company will refocus on its health, beauty and hygiene operations, suggesting the divestment could include its food operations, which include ice cream brands Ben & Jerry’s and Magnum.

The change in strategy came after Glaxo announced over the weekend that it had turned down three offers from the consumer products company for a bundle of brands including pain reliever Advil and Sensodyne toothpaste, the last of which was valued at 50 billion pounds ($68 billion).

Unilever shares fell as much as 7.3% in London. Glaxo rose as much as 5.9%.

“This is not about Unilever going from a £100 billion company to a £150 billion company because there will be a portfolio turnover,” Chief Executive Officer Alan Jope said in a phone call with reporters on Monday. “We are looking for competitive and responsible growth and not to confuse this activity with a defensive mentality.”

Jope is intent on making his biggest change at Unilever since he became chief executive three years ago. The company will review food businesses with lower growth prospects, although it has no immediate plans to sell its entire food and beverage operation, it said. Brands like Hellmann mayonnaise and Ben & Jerry’s ice cream have good growth prospects, he added.

The acquisition of the Glaxo unit is not the only possible option for Unilever in its quest to expand in the healthcare sector, according to Jope. The planned reorganization will focus on seeking new growth rather than cutting costs, he said.

Analysts value Glaxo’s consumer business at £48 billion, so any successful bid from Unilever would have to include a significant premium above that level, as well as synergy considerations, to tempt Glaxo out of the plan. advanced stage.

Unilever has been in talks with the bank about additional financing for a possible increased bid for the Glaxo unit, according to people familiar with the matter.

Several financial firms have spoken of sufficient loans for higher bids. Unilever has not yet made a final decision on how to use the funds, said the people, who requested anonymity because they are not authorized to speak publicly.

Glaxo had planned to divest its consumer brand, but shareholders including Elliott Investment Management LP have pushed Chief Executive Officer Emma Walmsley to consider a sale instead. The drugmaker said over the weekend that it maintained its plans to divest its portfolio.

open to talk

Glaxo’s board is open to proposals, but the most recent offer submitted late last year was not in the range the company would consider, the people said. The pharmaceutical giant discussed the growth prospects of the unit, which was formed through a combination of its consumer brand with the Pfizer Inc. brand, which retains a minority stake.

Unilever has made preparations that can facilitate the divestment of its food business. Just over a year ago, the company was transformed into a single entity based in the UK, ending its dual citizenship. One reason to abandon complex structures is to ease the prospect of mergers and acquisitions deals.

At that time, Jope convinced the Dutch government that the company’s Food and Drink division might spin-off in the Netherlands. The business generates an annual revenue of 19,000 million euros. The Beauty and Personal Care division, which Jope ran before being promoted to CEO, earned around 21 billion euros, and the Home Care division had annual sales of 10.5 billion euros.

Unilever can sell whole food units, which make Knorr broth cubes, Marmite yeast spreads, Colman and Maille mustard, Hellmann mayonnaise, and other products as plant-based protein alternatives. Or it could leave its ice cream business, the largest in the world, which includes brands like Ben & Jerry’s, Magnum, Solero, as well as upscale ice cream brands Grom and Talenti. It generates revenues of around 7,000 million euros per year.

The deal by consumer unit Glaxo will be one of the largest globally in the past twelve months, and will come at a time when merger and acquisition activity is at an all-time high.

original note:

Unilever’s $68 Billion Offer for GSK Units Marks Health Pivot (1)

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