REG - GlaxoSmithKline PLC - Update - GSK Consumer Healthcare

GSKAnnouncement

17/01/2022 07:05

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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 £50 billion
comprising £41.7 billion in cash and £8.3 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 £9.6 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 £150 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 (https://www.gsk.com/en-gb/about-us/) .

 

 

 GSK enquiries:
 Media enquiries:             Tim Foley         +44 (0) 20 8047 5502  (London)
                              Kathleen Quinn    +1 202 603 5003       (Washington DC)

 Analyst/Investor enquiries:  Nick Stone        +44 (0) 7717 618834   (London)
                              Sonya Ghobrial    +44 (0) 7392 784784   (Consumer)
                              James Dodwell     +44 (0) 20 8047 2406  (London)
                              Mick Readey       +44 (0) 7990 339653   (London)
                              Josh Williams     +44 (0) 7385 415719   (London)
                              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.

 

 

Registered in England & Wales:

No. 3888792

 

Registered Office:

980 Great West Road

Brentford, Middlesex

TW8 9GS

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