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Unilever wants the attractive cash flow and growth of GSK’s joint venture with Pfizer (4-6% is the aim for the GSK unit, though many think this is a tad ambitious).

Unilever CEO Alan Jope is under pressure to grow the business after a lacklustre few years – a megadeal highlights the difficulty is fixing the core business and/or a lack of ideas. Terry Smith – boss of Fundsmith, a top shareholder – says the company has ‘clearly lost the plot’ (in his annual letter to shareholders).

GSK’s CEO Emma Walmsley is under pressure, too, not least from activist investors, to bolster the firm’s drugs pipeline; a particularly acute concern having missed out on a covid vaccine.

Debt may prohibit Unilever from going much higher; the company leveraged itself up after the Kraft-Heinz bid to ward off leveraged buyers…ironic that this could stop it from doing a deal. Other suitors, including private equity, may move in for the kill.

Does Unilever want it bad enough? I don’t think so. More pressing things to consider … like the purpose of mayonnaise. Feels like bolting together two rather slow growth consumer staples businesses, which leaves scale/synergies as the key to success … but then you still have all the debt to pay down.



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