Martin Deboo at Jefferies said boosting the offer to a £55bn all-cash bid would lift the cost and debt for Unilever to a “prohibitive amount”. 

Unilever would be forced to either tap investors by raising £14bn or by borrowing and selling assets, most likely from its foods business, to fund an improved offer while keeping debt contained, he said. Jefferies said the initial bid had a “modest” premium.

“We would expect disclosure of Unilever’s approach to encourage other over-the-counter participants like P&G and Reckitt to reach for their slide rules, as well as perhaps Nestle,” Mr Deboo said. “Any auction would be a test of Unilever’s resolve and already-stretching deal economics.”

GSK plans to demerge and list the consumer healthcare business but is open to a sale if it can deliver better returns for shareholders. 

The firm has been under intense pressure from feared US activist investor Elliott Advisors, which has urged it to explore a sale. 

GSK said Unilever’s three bids “fundamentally undervalued the consumer healthcare business and its future prospects”, arguing it failed to recognise the division’s “potential”.

It added that it “remains focused on executing its proposed demerger” and the spin off “is on track to be achieved in mid-2022”.

Unilever argued the GSK consumer healthcare division is “a leader in the attractive consumer health space and would be a strong strategic fit as Unilever continues to re-shape its portfolio”.

News of the bids came just days after one of Unilever’s top investors blasted the firm for its “ludicrous” focus on sustainability.

Terry Smith, who manages the £29bn Fundsmith Equity fund, said in a letter to his investors: “A company which feels it has to define the purpose of Hellmann’s mayonnaise has, in our view, clearly lost the plot.

“The Hellmann’s brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert – salads and sandwiches).”

Unilever and GSK declined to comment.