TIDMGSK
RNS Number : 5548Y
GlaxoSmithKline PLC
17 January 2022
Issued: 15 January 2022, London UK
Update - GSK Consumer Healthcare
GlaxoSmithKline (GSK) plc today confirms that it has received
three unsolicited, conditional and non-binding proposals from
Unilever plc to acquire the GSK Consumer Healthcare business. The
latest proposal received on 20th December 2021 was for a total
acquisition value of GBP50 billion comprising GBP41.7 billion in
cash and GBP8.3 billion in Unilever shares. The Consumer Healthcare
business is a Joint Venture between GSK and Pfizer, with GSK
holding a majority controlling interest of 68% and Pfizer 32%.
GSK rejected all three proposals made on the basis that they
fundamentally undervalued the Consumer Healthcare business and its
future prospects.
The Board of GSK is strongly focused on maximising value for GSK
shareholders and has carefully evaluated each Unilever proposal. In
doing so, the Board and its advisers assessed the proposals
relative to the financial planning assessments completed to support
the proposed demerger of the business in mid-2022, including the
sales growth outlook set out below.
Global leader in Consumer Healthcare
The Consumer Healthcare business has been transformed since 2014
through the successful integrations of GSK's business with the
Novartis consumer health portfolio in 2015 and the Pfizer portfolio
in 2019. Importantly, this transformation has also provided a
platform to scale and optimise many aspects of the Consumer
Healthcare business including divesting lower growth brands,
introducing a new R&D/innovation model, optimising the supply
chain and manufacturing network, alongside continued investment in
new digital, data and analytic platforms and capabilities.
This has resulted in the creation of a leading global consumer
healthcare business with annual sales of GBP9.6 billion in 2021(1)
. The business has an exceptional portfolio of world-class,
category-leading brands; global scale with footprint and
distribution capability to serve more than 100 markets; strong
brand building, innovation and digital capabilities; and offers a
unique proposition that combines trusted science with human
understanding.
The business is led by a highly skilled management team with
deep experience in consumer healthcare and FMCG with strong
commitment to delivery on its purpose and growth ambitions.
Superior growth and highly attractive financial profile
The business is well-positioned to sustainably grow ahead of its
categories in the years to come. The fundamentals for the GBP150
billion consumer healthcare sector are strong, reflecting an
increased focus on health and wellness, significant demand from an
ageing population and emerging middle class, and sizeable unmet
consumer needs.
Over the period 2019-2021 the Consumer Healthcare business
delivered a 4% organic sales growth CAGR(2) outpacing its
categories and despite the adverse impact of the COVID
pandemic.
Superior sales growth for the business is expected to result
from a strategy that puts the consumer at the heart of the business
to better address every-day health and wellness needs, in
particular by increasing household penetration of its leading
brands and capitalising on new and emerging growth opportunities
arising from innovation and the use of new technologies and digital
platforms, all underpinned by continued strong execution and
financial discipline. Over the medium term, superior sales growth
is expected to be primarily driven by continued momentum of key
brands in Oral Care, VMS, and Pain Relief; accelerating innovation
in the US and China; and further growth in emerging markets.
Reflecting these trends, and the investments made and planned
for the business, the Board of GSK is confident that the Consumer
Healthcare business can sustainably deliver annual organic sales
growth in the range of 4-6% (CER) over the medium term.
The combination of superior organic sales growth, operating
margin expansion and consistent high cash generation will, we
believe, offer both existing and prospective shareholders a highly
attractive financial profile that facilitates continued investment
in growth, the delivery of attractive returns and the opportunity
of continued participation in long-term value creation.
Proposals fundamentally failed to reflect the intrinsic value of
the business and its potential
The Board of GSK unanimously concluded that the proposals were
not in the best interests of GSK shareholders as they fundamentally
undervalued the Consumer Healthcare business and its future
prospects.
The Board of GSK therefore remains focused on executing its
proposed demerger of the Consumer Healthcare business, to create a
new independent global category-leading consumer company which,
subject to approval from shareholders, is on track to be achieved
in mid-2022.
Capital Markets event
GSK intends to share further details of the strategy, brands,
capabilities and operations, including detailed financial
information and future growth ambitions for the new Consumer
Healthcare business at a virtual Capital Markets Day for investors
and analysts on Monday 28th February 2022.
Notes
(1) Unaudited. (2021 full year results for GSK due to be
announced on 9th February 2022)
(2) Excluding the impact of brands divested/ under review, on a
CER basis
About GSK
GSK is a science-led global healthcare company. For further
information please visit www.gsk.com/about-us .
GSK enquiries:
Media enquiries: Tim Foley +44 (0) 20 8047 (London)
5502
Kathleen Quinn +1 202 603 5003 (Washington
DC)
Analyst/Investor Nick Stone +44 (0) 7717 (London)
enquiries: 618834
Sonya Ghobrial +44 (0) 7392 (Consumer)
784784
James Dodwell +44 (0) 20 8047 (London)
2406
Mick Readey +44 (0) 7990 (London)
339653
Josh Williams +44 (0) 7385 (London)
415719
Jeff McLaughlin +1 215 751 7002 (Philadelphia)
Frannie DeFranco +1 215 751 4855 (Philadelphia)
Cautionary statement regarding forward looking statements
This announcement contains statements that are, or may be deemed
to be, "forward-looking statements". GSK cautions investors that
any forward-looking statements or projections made by GSK,
including those made in this announcement, are subject to risks and
uncertainties that may cause actual results to differ materially
from those projected. Such factors include, but are not limited to,
those described in the Company's Annual Report on Form 20-F for
2020, GSK's 2021 Q3 Results and any impacts of the COVID-19
pandemic. GSK undertakes no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise. Accordingly, no assurance can be given
that any particular expectation will be met and investors are
cautioned not to place undue reliance on the forward-looking
statements.
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END
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