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GLAXOSMITHKLINE PLC

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Delayed London Stock Exchange  -  05/25 11:35:24 am EDT
1775.00 GBX   -0.39%
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Shareholder Terry Smith labels Unilever's GSK bid "near death experience"

01/20/2022 | 11:04am EDT
A GSK logo is seen at the GSK research centre in Stevenage

(Reuters) - Influential British fund manager Terry Smith attacked Unilever's failed 50 billion pound ($68.2 billion) bid for GSK's Consumer Health assets as a "near death experience" and urged Unilever management to focus on strengthening performance.

In a letter to investors of his Fundsmith vehicle, now the 13th biggest Unilever shareholder, Smith criticized Unilever for failing to openly communicate the benefits of the deal and its "penchant for corporate gobbledegook as substitute for effective action."

"It seems to us that Unilever management's response to its poor performance has been to utter meaningless platitudes to which it has now attempted to add major M&A activity. What could possibly go wrong?," said the letter, signed by Smith and head of research, Julian Robins.

Unilever did not immediately respond to a request for comment.

Late on Wednesday, Unilever effectively abandoned its offer for GlaxoSmithKline's Consumer Health unit, after the deal was widely panned by the market and analysts.

GSK had said the bid undervalued the business and that it would go ahead with its plan to spin it off instead.

"We are pleased that the Unilever management listened and has seemingly ended the attempt to acquire GSK Consumer by refusing to up its bid for a fourth time," the letter said, describing its critique as a post-mortem into a "near death experience" in the form of the failed approach.

Smith's "near death experience" phrase echoed comments made by Unilever's previous CEO Paul Polman when describing his successful fight against a hostile takeover bid by Kraft Heinz in 2017.

Having rejected the bid, GSK's consumer business would face its own reckoning when it is listed as a separate company later this year, the Fundsmith letter added.

This isn't Smith's first recent attack on Unilever.

Last week, he criticised Unilever for being "obsessed" with sustainability at the expense of performance, after the stock featured among its equity fund's bottom-5 performers in 2021.

($1 = 0.7332 pounds)

(Reporting by Siddharth Cavale in Bengaluru; Editing by Keith Weir)

By Siddharth Cavale


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
GLAXOSMITHKLINE PLC -0.39% 1775 Delayed Quote.10.48%
POLMAN S.A. -0.29% 0.349 End-of-day quote.-30.20%
THE KRAFT HEINZ COMPANY 0.68% 39.88 Delayed Quote.11.09%
UNILEVER PLC -1.26% 3496.5 Delayed Quote.-11.47%
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Sales 2022 36 527 M 45 865 M 45 865 M
Net income 2022 5 289 M 6 641 M 6 641 M
Net Debt 2022 17 655 M 22 168 M 22 168 M
P/E ratio 2022 16,7x
Yield 2022 2,96%
Capitalization 89 836 M 113 B 113 B
EV / Sales 2022 2,94x
EV / Sales 2023 2,79x
Nbr of Employees 90 096
Free-Float 93,6%
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Last Close Price 1 775,00 GBX
Average target price 1 865,77 GBX
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Emma N. Walmsley Chief Executive Officer & Executive Director
Iain James Mackay Chief Financial Officer & Executive Director
Jonathan Richard Symonds Non-Executive Chairman
Hal V. Barron Executive Director & Chief Scientific Officer
Jon Ellis VP & Head-Technology Business Development
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