Live news: Asia-Pacific stocks mixed as China growth slows

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Unilever has defended its plan to acquire the consumer health division of GlaxoSmithKline following scepticism from analysts about its £50bn bid.

The maker of Dove soap, Hellmann’s mayonnaise and Domestos bleach, today said GSK Consumer Healthcare was a “strong strategic fit”, and the proposed purchase was in line with Unilever’s plans to increase its presence in health, beauty and hygiene.

“The acquisition would create scale and a growth platform for the combined portfolio in the US, China, and India, with further opportunities in other emerging markets,” it said, adding that it would sell off “intrinsically lower growth brands and businesses”.

Unilever’s approaches for GSK Consumer Healthcare, which makes Aquafresh toothpaste and Panadol painkillers, have so far been rebuffed, but it hopes to continue talks, according to people familiar with the situation.

The update came as analysts expressed scepticism about the potential deal.

“We see little justification for such a deal strategically, operationally or financially,” said James Edwardes-Jones, analyst at RBC Capital Markets.

Bruno Monteyne, analyst at Bernstein, said the deal would entail “£10bn of shareholder value destruction”.

Unilever said that after any acquisition “the company would target a return to current levels of gearing over the short to medium term”.

The group said it would outline a “major initiative to enhance our performance” this month, including structural changes.

Unilever shares fell 4.8 per cent in early dealings in London. GSK shares rose 5.4 per cent.

Read More: Live news: Asia-Pacific stocks mixed as China growth slows

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