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Unilever Consumer Care’s stock price shot through the roof. The name change could be why.

  • Published at 06:02 pm December 7th, 2020
Unilever GSK merger acquisition

The company was previously known as GSK Bangladesh

Unilever Consumer Care, a subsidiary of Unilever Bangladesh, has witnessed an unprecedented stock price rally of 47.7 per cent in less than 10 days. 

The stock started its gaining streak from November 29 when its name was changed to Unilever Consumer Care from GlaxoSmithKline Bangladesh.

It closed at Tk 3,023.6 per share on Monday, moving up from Tk 2,046.8 during the previous seven trading sessions. 

Earlier in June, Unilever acquired about 82 per cent stakes in GlaxoSmithKline (GSK) Bangladesh, which has been listed with the bourses since 1976, from Setfirst for Tk 2,020.8 crore, making it the largest transaction by a single company on the Dhaka bourse.

Under the acquisition, Unilever got the ownership of GSK’s iconic health food and drinks (HFD) portfolio brands including Horlicks, Boost and Glaxose-D.

The acquisition though came under the scanner of the Bangladesh Securities and Exchange Commission five months later, which raised issues about GSK Bangladesh’s name change to Unilever Consumer Care in July, along with other matters.

This name change, it seems, has confused the uninformed retail investors, who jumped to snap up shares of Unilever Consumer Care, sending its price soaring. 

The price hike has prompted the Dhaka Stock Exchange to seek an explanation from Unilever Consumer Care. 

In response, the company yesterday announced there was no undisclosed price-sensitive information that could have fuelled the recent unusual price hike and the increase in the volume of shares. 

Investors are lured to the stock after the name-change took place, said several stock brokers. 

Global brands such as Unilever often create sentimental values for small-scale and general investors, said a stockbroker asking not to be named. 

In addition to the name-change, the company was previously placed in the “Pharmaceutical and Chemicals” sector category of the bourse but now has been placed under “Food & Allied” sector category with effect from November 26. 

Unilever Consumer Care earlier reported a profit of Tk 45.8 crore for the first nine months the year, down 12.3 per cent year-on-year.

The decline resulted from lower sales due to coronavirus pandemic, higher inflation in raw material price, increased custom duty on the DMI from the 2020 fiscal budget and write-off of obsolete ERP system, the company said in a web posting on the Dhaka Stock Exchange website on October 28. 

The company was listed with the Dhaka bourse in 1976 and has been consistently paying out cash dividend to its investors, at least in the recent several years.

Currently, sponsors/directors hold 90.5 per cent stake of the company; institutions hold 5.5 per cent stake, foreign investors about 0.4 per cent and general investors the remaining 3.6 per cent.

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