After the collapse of a mega-deal to buy Aquafresh from GlaxoSmithKline on the arm of Panadol… Unilever’s £5 billion plan to create its own health brands

Consumer goods giant Unilever has hatched an ambitious £5billion plan to replicate the business it failed to buy from GlaxoSmithKline.

Managing Director Alan Jope is embarking on a strategy to expand its health and beauty brands overseas. He hopes to further expand his sales through a series of deals.

Earlier this year, GSK fended off a trio of mega-bids for its consumer health arm, which includes the Aquafresh and Panadol brands and has sales of £10bn.

Hoping to pocket a fortune: Alan Jope embarks on a strategy to grow Unilever’s health and beauty brands overseas

Marmite-a-Dove maker Unilever pulled out of the deal after GSK demanded a higher price than its £50bn final offer.

Investors balked at the deal price, sending Unilever shares tumbling. Jope fought to get them back to the side.

He told the Consumer Analyst Group conference in New York – attended by analysts, investors and executives from many of his rivals – that he planned to invest in his flagship beauty division, launched in 2015 and which will counts brands such as skin care company Dermalogica. It grosses €1bn (£840m) in over 100 markets.

Unilever also plans to invest in its functional nutrition division, which is worth 1.5 billion euros and includes Horlicks.

Jope told the conference: “In the coming years, we aim to grow both the prestige of Unilever and Functional Nutrition to over €3 billion in revenue each through sustained strong organic growth as well as the pursuit of additional acquisitions.”

In his presentation – seen as part of his strategic response to the failed bid – Jope highlighted a series of takeovers inked since 2018 that he says will help drive growth across all divisions.

These include gummy vitamin brand SmartyPants, skincare company Paula’s Choice and electrolyte drink mix Liquid IV, which is sold in the United States. About the nutrition arm, he said: “In just three years, we’ve built a €1.5 billion business that grew 22% in 2021 and now has very strong leadership positions.”

He also outlined plans to accelerate growth in the United States, India, China and emerging markets.

Unilever has spent €16bn (£12bn) on 29 acquisitions since 2017, mostly in the nutrition sector. It has also raised €11 billion from selling brands during this period, including the €6.8 billion divestiture of its spreads business, which includes Flora, in 2018 to capital firm -KKR investment. Jope said last month: “We will continue to reshape our portfolio, but through incremental acquisitions and selective divestments.”

City sources said the brands would play a vital role in generating revenue that would have been realized by taking over GSK’s consumer healthcare business, albeit over a long period.

They said the strategy could take five years to snare the £10bn in annual revenue the deal was expected to bring in.

Prior to GSK’s bid, Jope was under pressure from veteran investor Terry Smith who claimed bosses had “lost the plot”. It later emerged that billionaire activist investor Nelson Peltz had built a stake.

Recently, Unilever signaled that further price hikes are coming as inflation rages and expects its costs to rise to as much as £3bn this year.

In addition, the chief executive of GSK, Emma Walmsley, will give an update tomorrow on its strategy for splitting up its consumer healthcare activity. GSK plans to list the newly renamed Haleon division this summer.

Walmsley and Haleon chief executive Brian McNamara is expected to set margin targets and detail plans for debt repayment and research investment.

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