Shares of GlaxoSmithKline went up on Monday, while Unilever stock fell after a failed $68 billion bid by the latter to acquire the pharmaceutical giant's consumer healthcare arm.
GlaxoSmithKline GSK, GSK, went up 5% after saying on Saturday that it had received three separate bids from Unilever, the last coming December 20 and that it had received 50 billion $68.4 billion for the unit behind painkiller Advil and Sensodyne toothpaste, which it jointly owns with Pfizer PFE, Glaxo, which had been planning to spin off the unit.
The shares of Unilever dropped 6% at the top of the decliner's list. After a strategic review, the U.K. consumer goods group announced Monday that it will focus on higher-growth categories such as health, beauty and hygiene. It said that the plan will include acquisitions and the divesting of smaller growth brands and businesses.
Some investors are hoping Unilever will come up with a fourth bid. A team of Berenberg analysts led by James Targett said it would probably need to increase any new offer to 55 billion to get the deal done. In a note to clients, he said that competing bids from Procter Gamble PG, or private equity can't be ruled out.
He said that Unliever s management is showing itself as open to more transformative acquisitions, but questions are also raised about its ability to accelerate growth with the current portfolio. Targett said that 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.
Jefferies analysts noted indigestion risk for Glaxo shareholders of any deal.
The mid- 2022 E spin of consumer is viewed as an event that could crystallize value, so a sale likely dampens the appetite to own the stock at a time when the pipeline is a work-in progress, according to a team led by analyst Peter Welford. A sale in the 50 billion ballpark would leave management with 34 billion in cash for the stake, leaving the company with 12 billion net cash.
The analyst believes that this war chest provides enough strategic optionality to rebuild a pipeline and invest in focus therapeutic areas, but at least initially many shareholders would fear a large acquisition and the risk of inferior returns. Shares of Unliever rival Reckitt Benckiser RKT rose by 1.5%. Novo Nordisk NVO, NOVO.B, rose 1% and Sanofi SNY, SAN, up 1.3%, with shares of Novo Nordisk NVO, NOVO.B, up 1%.
The data showed that China's economy expanded by 8.1% in 2021, but fell to 4% over a year earlier in the final three months of 2021, according to investors.
The Stoxx Europe 600 index, SXXP, went up 0.2% to 482, coming off last week's 1% drop, the second weekly decline to start 2022.
The German DAX DAX DAX rose 0.2%, the French CAC 40 PX 1 rose nearly 0.4% and the FTSE 100 index climbed 0.6%. The markets in the U.S. are closed on Monday in observance of Martin Luther King, Jr. Day.