Unilever Acquisition: Sentiment or Risk?

Consumer giant, Unilever, plans to acquire a medical device company owned by pharmaceutical groups GlaxoSmithKline and Pfizer for £50 billion, or around Rp974.38 trillion (exchange rate Rp16,220.60 per £1). This acquisition offer plan had previously been put forward but was rejected because the value was deemed too low. "GSK Consumer Healthcare would be a suitable strategy," said British company Unilever, in a statement, quoted by CNBC Indonesia, Monday (1/17). The proposal reveals an acquisition offer worth £50 billion, or about US$68.4 billion (Rp978.12 trillion). The value includes a cash payment of £41.7 billion and £8.3 of Unilever stock. For the record, GSK Consumer Healthcare is a joint venture between GSK and Pfizer, where GSK acts as the largest shareholder with 68% ownership and Pfizer 32%. 

"As a result of Unilever's report of interest in GSK Consumer Healthcare, today we are proposing a planned update, setting out the strategic direction the company is currently pursuing," Unilever said to CNBC Indonesia on Monday (1/17). Global rating agency, Fitch Ratings, assessed Unilever risked sacrificing its top credit rating if it proceeded with a new bid for its consumer health division GlaxoSmithKline (GSK), which was valued at £50 billion or Rp978 trillion (exchange rate Rp16,220.60 per £1). Fitch said that no material divestment would push Unilever's debt to between 4.5 and 5 times earnings before interest, taxes, depreciation and amortization, a level at which Fitch would consider an adverse rating action. "Unilever, whic