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Jan. 17, 2022, 6:56 a.m. EST

GlaxoSmithKline shares soar after Unilever bids for its consumer healthcare unit

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By Barbara Kollmeyer

Shares of GlaxoSmithKline rose on Monday, while Unilever stock tumbled following a failed $68 billion bid by the latter to acquire the pharmaceutical giant’s consumer healthcare arm.

Driving the FTSE 100 higher and at the top of the Stoxx Europe 600’s gainer’s list, was GlaxoSmithKline /zigman2/quotes/209463850/composite GSK +0.56% /zigman2/quotes/200381158/delayed UK:GSK +0.09% , up 3% after saying Saturday that it has rejected an unsolicited £50 billion ($68.4 billion) Unilever /zigman2/quotes/204685760/composite UL +0.59% /zigman2/quotes/205449809/delayed UK:ULVR -0.44% offer for the unit behind painkiller Advil and Sensodyne toothpaste that it owns with Pfizer /zigman2/quotes/202877789/composite PFE +1.00% , which owns a 32% equity stake against GSK’s 68%.

Glaxo, which had been planning to spin off the unit, said it had received three separate bids from Unilever, the last coming Dec. 20.

At the top of the decliner’s list, Unilever shares dropped 8%. The U.K. consumer goods group announced Monday that it will focus on higher-growth categories such as health, beauty and hygiene following a strategic review. That plan will include acquisitions and divesting lower growth brands and businesses, it said.

Some investors are hoping Unilever come up with a fourth bid. A team of Berenberg analysts led by James Targett, said it wll probably need to increase any new offer to £55 billion to get the deal done. That’s as competing bids from Procter & Gamble /zigman2/quotes/202894679/composite PG +1.78% or private equity can’t be ruled out, he said, in a note to clients.

And while Unliever’s management is showing itself as “open to more transformative acquisitions,” questions are now also raised about its ability to accelerate growth with the current portfolio, he said. Divesting the food & refreshment unit could fund a further bid for the Glaxo arm, but that would mean giving up some of Unilever’s most attractive categories, said Targett.

Jefferies analysts also noted some “indigestion risk” for Glaxo shareholders of any deal.

“The mid-2022E spin of consumer is widely viewed as an event that could crystallize value, hence a sale likely dampens near-term appetite to own the stock at a time when the pipeline remains a work-in progress,” said a team led by analyst Peter Welford. A sale in the £50 billion ballpark would leave management with £34 billion in cash for that stake, leaving the company with £12 billion net cash.

“In theory this war chest provides ample strategic optionality to rebuild a pipeline and invest in focus therapeutic areas, but at least initially we expect many shareholders would fear a large acquisition and the risk of inferior returns,” said the analyst. Jefferies rates GlaxoSmithKline a buy.

Elsewhere, shares of Unliever rival Reckitt Benckiser /zigman2/quotes/206856088/delayed UK:RKT +0.16% rose 1.5%. The healthcare sector was rising across the board, with shares of Novo Nordisk /zigman2/quotes/203484366/composite NVO +0.13% /zigman2/quotes/207193277/delayed DK:NOVO.B +0.01% up 1% and Sanofi /zigman2/quotes/201967021/composite SNY +1.55% /zigman2/quotes/206928357/delayed FR:SAN +0.29% rising 1.3%.

Investors were also absorbing data that showed China’s economy expanded by 8.1% in 2021, but sank to 4% over a year earlier in the final three months of 2021.

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.18% rose 0.5% to 483.79, coming off last week’s 1% drop, the second straight weekly decline to start 2022.

The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.03% rose 0.2%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.04% rose nearly 0.4% and the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.26% climbed 0.6%. U.S. markets are closed Monday in observance of  in observance of Martin Luther King, Jr. Day.

The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.03% rose 0.2%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.04% rose nearly 0.4% and the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.26% climbed 0.6%. U.S. markets are closed Monday in observance of  in observance of Martin Luther King, Jr. Day.

/zigman2/quotes/209463850/composite
US : U.S.: NYSE
$ 45.00
+0.25 +0.56%
Volume: 6.59M
May 24, 2022 4:00p
P/E Ratio
16.32
Dividend Yield
4.35%
Market Cap
$113.37 billion
Rev. per Employee
$552,510
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/zigman2/quotes/200381158/delayed
UK : U.K.: London
£ 1,783.60
+1.60 +0.09%
Volume: 1.20M
May 25, 2022 1:31p
P/E Ratio
17.68
Dividend Yield
N/A
Market Cap
£90.17 billion
Rev. per Employee
£404,857
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/zigman2/quotes/204685760/composite
US : U.S.: NYSE
$ 44.70
+0.26 +0.59%
Volume: 2.38M
May 24, 2022 4:00p
P/E Ratio
16.30
Dividend Yield
4.30%
Market Cap
$109.84 billion
Rev. per Employee
N/A
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/zigman2/quotes/205449809/delayed
UK : U.K.: London
3,525.50 p
-15.50 -0.44%
Volume: 570,174
May 25, 2022 1:32p
P/E Ratio
17.69
Dividend Yield
4.11%
Market Cap
£90.15 billion
Rev. per Employee
£304,541
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/zigman2/quotes/202877789/composite
US : U.S.: NYSE
$ 53.41
+0.53 +1.00%
Volume: 26.73M
May 24, 2022 4:03p
P/E Ratio
12.26
Dividend Yield
3.00%
Market Cap
$296.70 billion
Rev. per Employee
$1.17M
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/zigman2/quotes/202894679/composite
US : U.S.: NYSE
$ 147.63
+2.58 +1.78%
Volume: 7.21M
May 24, 2022 4:03p
P/E Ratio
25.80
Dividend Yield
2.47%
Market Cap
$348.02 billion
Rev. per Employee
$788,297
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/zigman2/quotes/206856088/delayed
UK : U.K.: London
6,240.00 p
+10.00 +0.16%
Volume: 220,520
May 25, 2022 1:32p
P/E Ratio
N/A
Dividend Yield
2.80%
Market Cap
£44.54 billion
Rev. per Employee
£253,026
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/zigman2/quotes/203484366/composite
US : U.S.: NYSE
$ 107.98
+0.14 +0.13%
Volume: 866,694
May 24, 2022 4:00p
P/E Ratio
32.16
Dividend Yield
1.04%
Market Cap
$242.68 billion
Rev. per Employee
$486,085
loading...
/zigman2/quotes/207193277/delayed
DK : Denmark: OMX
kr. 746.90
+0.10 +0.01%
Volume: 459,710
May 25, 2022 2:32p
P/E Ratio
34.72
Dividend Yield
1.39%
Market Cap
kr.1681.32 billion
Rev. per Employee
kr.3.12M
loading...
/zigman2/quotes/201967021/composite
US : U.S.: Nasdaq
$ 56.29
+0.86 +1.55%
Volume: 3.02M
May 24, 2022 4:00p
P/E Ratio
19.28
Dividend Yield
2.24%
Market Cap
$139.06 billion
Rev. per Employee
$467,643
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/zigman2/quotes/206928357/delayed
FR : France: Euronext Paris
103.92
+0.30 +0.29%
Volume: 469,586
May 25, 2022 2:32p
P/E Ratio
21.01
Dividend Yield
3.20%
Market Cap
€130.25 billion
Rev. per Employee
€395,643
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/zigman2/quotes/210599654/delayed
XX : STOXX
432.34
+0.76 +0.18%
Volume: 0.00
May 25, 2022 2:32p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
13,915.30
-4.45 -0.03%
Volume: 23,178
May 25, 2022 2:32p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
6,250.39
-2.75 -0.04%
Volume: 26,388
May 25, 2022 2:32p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,503.57
+19.22 +0.26%
Volume: 229,375
May 25, 2022 1:32p
loading...
/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
13,915.30
-4.45 -0.03%
Volume: 23,178
May 25, 2022 2:32p
loading...
/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
6,250.39
-2.75 -0.04%
Volume: 26,388
May 25, 2022 2:32p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,503.57
+19.22 +0.26%
Volume: 229,375
May 25, 2022 1:32p
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