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Unilever (ULVR)

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monabri
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Re: Unilever (ULVR)

#473911

Postby monabri » January 17th, 2022, 8:52 pm

Another plot twist!

https://www.telegraph.co.uk/business/20 ... ver-swoop/

"Glaxo courts Qatar and Singapore to head off £50bn Unilever swoop
FTSE 100 pharma giant to open talks with sovereign wealth funds next month to shore up support for consumer healthcare float plan"

"Securing the backing of a sovereign wealth fund will allow GSK to offer an exit to investors who do not wish to hold stock in the new company. The Qatar Investment Authority and Singapore’s GIC are among those that will be targeted, it is understood."

"A takeover by Unilever is less appealing for the GSK board as the company would likely face significant competition hurdles and drag out the timetable for investors to cash out. "

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Re: Unilever (ULVR)

#473944

Postby ADrunkenMarcus » January 17th, 2022, 10:31 pm

I wouldn't want Unilever to do as Reckitt Benckiser did with Mead Johnson (leading to huge write-downs, vandalising the clean valance sheet and trashing the company's ROCE). Whether acquiring GSK's consumer business would do that, I wouldn't presume to say. We would need to see the full details of what was being proposed.

However, if it does not happen then I will settle for Unilever's management living in abject terror and getting the existing business working. In consumer goods, it's a case of fix or be fixed IMHO!

Best wishes,


Mark.

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Re: Unilever (ULVR)

#473981

Postby TheMotorcycleBoy » January 18th, 2022, 7:52 am

It seems highly likely that management have lost the plot. Back in March 2021:

https://www.investegate.co.uk/unilever- ... 30017706X/

the stated aim of which

The Initial Programme, the purpose of which is to reduce the capital of Unilever PLC, will take place within the limitations of the authority granted to the Board of Unilever PLC by its general meeting, held on 5th May 2021, pursuant to which the maximum number of shares to be bought back by Unilever PLC is 262,811,000

So they "wanted to reduce their capital" then, despite knowing full well back then that GSK's health care was on the table? And now, when it looks as if they may not have the readies sufficient to buy HC, they are suddenly looking to raise capital. They seem to be asleep at the wheel. Zero forward planning, not how I do business.

Matt

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Re: Unilever (ULVR)

#473990

Postby dealtn » January 18th, 2022, 8:57 am

TheMotorcycleBoy wrote:It seems highly likely that management have lost the plot. Back in March 2021:

https://www.investegate.co.uk/unilever- ... 30017706X/

the stated aim of which

The Initial Programme, the purpose of which is to reduce the capital of Unilever PLC, will take place within the limitations of the authority granted to the Board of Unilever PLC by its general meeting, held on 5th May 2021, pursuant to which the maximum number of shares to be bought back by Unilever PLC is 262,811,000

So they "wanted to reduce their capital" then, despite knowing full well back then that GSK's health care was on the table? And now, when it looks as if they may not have the readies sufficient to buy HC, they are suddenly looking to raise capital. They seem to be asleep at the wheel. Zero forward planning, not how I do business.

Matt


So in a hypothetical world where you might have an overdraft, and a monthly salary from which you have excess funds that enable you to save, what do you do?

You might have a potential need for a new car in a year or twos time, or a wish to move house requiring an additional mortgage, for instance.

Do you eshew paying off the overdraft, preferring to hold cash at home, because you might need that bank finance at some point in the future for those large strategic items. Or do you for short term reasons pay down the overdraft, save interest etc. and consider the financing of those longer term items (that might not happen, or be significantly different) as and when they become more solid, enjoying the flexibility and potential liquidity when required?

Having short term Capital allocation decisions isn't mutually exclusive to having concurrent longer-term ones which depend on a large number of variables both in terms of outcome and how they might be financed.

I've not been overly impressed with the (short term) actions of this particular Board of Directors, although I am a holder of their equity, but I wouldn't be impressed either by a dogmatism around Capital allocation that precluded repayment of excess Capital.

ADrunkenMarcus
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Re: Unilever (ULVR)

#473995

Postby ADrunkenMarcus » January 18th, 2022, 9:05 am

Looks like the forward dividend yield is now over 4%, assuming a 2.5% increase(!) and same exchange rate!

Best wishes


Mark

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Re: Unilever (ULVR)

#474008

Postby Dod101 » January 18th, 2022, 9:40 am

monabri wrote:I was expecting a bigger jump in GSK and a bigger fall in ULVR but then again it's all speculative at the moment.


Have patience. Unilever is now about £35.60. The market does not like the proposed deal it would seem.

Dod

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Re: Unilever (ULVR)

#474015

Postby BullDog » January 18th, 2022, 10:00 am

Down we go again...... :cry:

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Re: Unilever (ULVR)

#474018

Postby simoan » January 18th, 2022, 10:14 am

Dod101 wrote:
monabri wrote:I was expecting a bigger jump in GSK and a bigger fall in ULVR but then again it's all speculative at the moment.


Have patience. Unilever is now about £35.60. The market does not like the proposed deal it would seem.

Dod

I would say they are expecting, with a high probability, that Unilever will overpay out of the desperation of a discredited management team, and then announce a rights issue to foot the bill. At the end of the day, the dividend yield is likely to be lower too given the GSK Healthcare business would likely come with £10-15bn of debt in tow. It's Enterprise Value we should be concentrating on here, not the amount of the offer.

All the best, Si

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Re: Unilever (ULVR)

#474032

Postby TheMotorcycleBoy » January 18th, 2022, 10:44 am

Just cut my ULVR holdings by about 25-30%. It was too big a fish in my investment tank, and the hobby shop was selling several smaller, faster swimming ones at cheap prices this morning. Seemed like a decent swap.

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Re: Unilever (ULVR)

#474045

Postby BullDog » January 18th, 2022, 11:11 am

TheMotorcycleBoy wrote:Just cut my ULVR holdings by about 25-30%. It was too big a fish in my investment tank, and the hobby shop was selling several smaller, faster swimming ones at cheap prices this morning. Seemed like a decent swap.

Waiting for the dead cat bounce, then I am out of here ;)

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Re: Unilever (ULVR)

#474151

Postby monabri » January 18th, 2022, 5:01 pm

11% down in 5 days....I hope the board are listening to Mr Market's view!

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Re: Unilever (ULVR)

#474159

Postby MrFoolish » January 18th, 2022, 5:19 pm

I don't think British boardrooms have ever been good at negotiating. We always sell too cheaply (ARM, Vodafone) or buy at too high a price (again Vodafone). Still, it is probably less effort than trying to grow a business organically.

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Re: Unilever (ULVR)

#474160

Postby absolutezero » January 18th, 2022, 5:19 pm

monabri wrote:11% down in 5 days....I hope the board are listening to Mr Market's view!

If they think mayonnaise needs a 'mission statement' then they will probably think the market is telling them they aren't offering to pay enough...

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Re: Unilever (ULVR)

#474164

Postby scrumpyjack » January 18th, 2022, 5:31 pm

Just to put this bid in context. Unilever's market cap is £90 billion. £34 billion of that represents their shareholding in Hindustan Unilever (62% and separately quoted). So the bid they are making for Glaxo's healthcare business is about the same size as their existing entire business excluding the Indian shareholding. Quite ridiculously risky. I am not surprised the analysts are all pleading with them not to do it.

To me this indicates a huge lack of faith by Unilever in their existing business. Not good.

Jope is a Dope!

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Re: Unilever (ULVR)

#474176

Postby richfool » January 18th, 2022, 6:26 pm

Is this an opportunity to buy some Unilever on the cheap, whilst the SP is depressed, in anticipation that the bid will fail and the SP then recover?

monabri
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Re: Unilever (ULVR)

#474182

Postby monabri » January 18th, 2022, 6:52 pm

richfool wrote:Is this an opportunity to buy some Unilever on the cheap, whilst the SP is depressed, in anticipation that the bid will fail and the SP then recover?



I though so...yesterday :roll:

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Re: Unilever (ULVR)

#474184

Postby Darka » January 18th, 2022, 6:59 pm

richfool wrote:Is this an opportunity to buy some Unilever on the cheap, whilst the SP is depressed, in anticipation that the bid will fail and the SP then recover?


I would hold off, the market thinks that the bid is a mistake, don't trust management not to make it worse....

wait for the dust to settle.

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Re: Unilever (ULVR)

#474202

Postby richfool » January 18th, 2022, 7:55 pm

Yes, my comment was predominantly tongue in cheek. Had I proposed to do so, I would certainly have waited a bit longer to see what evolved.
The situation currently is not enhancing Unilever's reputation.

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Re: Unilever (ULVR)

#474205

Postby BullDog » January 18th, 2022, 7:59 pm

scrumpyjack wrote:Just to put this bid in context. Unilever's market cap is £90 billion. £34 billion of that represents their shareholding in Hindustan Unilever (62% and separately quoted). So the bid they are making for Glaxo's healthcare business is about the same size as their existing entire business excluding the Indian shareholding. Quite ridiculously risky. I am not surprised the analysts are all pleading with them not to do it.

To me this indicates a huge lack of faith by Unilever in their existing business. Not good.

Jope is a Dope!

Shades of ICI taking on the fragrances and flavours division of Unilever by massive and unaffordable leverage which was the final death knell of the company. Unlike the traditionally home grown ICI executives, the boss at ICI then was..... Ex Unilever. History doesn't repeat but it definitely rhymes :roll:

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Re: Unilever (ULVR)

#474272

Postby idpickering » January 19th, 2022, 5:24 am

Darka wrote:
I would hold off, the market thinks that the bid is a mistake, don't trust management not to make it worse....

wait for the dust to settle.


One of the best, common sense, comments in this thread imho.

No knee-jerk reactions from me. To sell out of ULVR now would be folly, not Foolish, again imho. My intention to perhaps buy more ULVR soon still stands though, but I'm in no hurry. Wise words from Darka indeed.

Ian.


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