Research Update: Unilever 'A+' Ratings Placed On CreditWatch Negative On Potential Acquisition Of GSK Consumer Healthcare

Unilever PLC has approached GSK and Pfizer about the potential acquisition of the GSK consumer health care business. According to GSK, Unilever's latest nonbinding proposal had a total acquisition value of £50 billion, including £41.7 billion in cash and the remainder in Unilever shares. Any such proposed acquisition will lead to a significant increase in Unilever's S&P Global Ratings-adjusted leverage to more than 4x on closing compared with our previous expectation of below 2.5x. We therefore placed on CreditWatch with negative implications our long-term 'A+' issuer credit rating on Unilever, our 'A+' issue-level rating on its unsecured debt, and our 'A-1' short-term rating on the company's commercial paper. The CreditWatch placement reflects our view that the size and timing of

...- Unilever PLC has approached GSK and Pfizer about the potential acquisition of the GSK consumer health care business. According to GSK, Unilever's latest nonbinding proposal had a total acquisition value of ú50 billion, including ú41.7 billion in cash and the remainder in Unilever shares. - Any such proposed acquisition will lead to a significant increase in Unilever's S&P Global Ratings-adjusted leverage to more than 4x on closing compared with our previous expectation of below 2.5x. - We therefore placed on CreditWatch with negative implications our long-term 'A+' issuer credit rating on Unilever, our 'A+' issue-level rating on its unsecured debt, and our 'A-1' short-term rating on the company's commercial paper. - The CreditWatch placement reflects our view that the size and timing of the proposed transaction indicate a step change in the group's longstanding acquisition strategy. It also reflects our view that Unilever's announcements have reduced the predictability of the group's...

Research Update