Thursday, 13 December, 2018


HUL to merge GSK Consumer Healthcare India with itself

WEB_GSK_Bigsstock_Edited Unilever invests in India with €3.3bn deal for GlaxoSmithKline's Horlicks
Patty Aguilar | 05 December, 2018, 15:19

Unilever is to buy GlaxoSmithKline's Horlicks nutrition business for $3.8 billion (R51bn), boosting the Anglo-Dutch group's position in India with the addition of the malted drink.

The deal would bring the brand of Horlicks, a malted-milk, in Hindustan Unilever's portfolio.

Mehta further said that this merger would create remarkable shareholder value through both cost synergies and revenue growth.

"The acquisition is transformative for our foods and refreshment business allowing us to enter the health foods drinks category, further strengthening our position in health and wellness".

Following the closure of the deal, GSK will own approximately 5.7 per cent of HUL, which the British drug maker intends to sell down in tranches.

In India, Horlicks and other nutrition products are sold by GSK India, a public company listed on the National Stock Exchange and Bombay Stock Exchange in which GSK holds a 72.5% stake. The transaction covers GSK's health food and drinks portfolio in India, Bangladesh and 20 other predominantly Asian markets.

"The turnover of our F&R business will now exceed Rs 10,000 crore and we will become one of the largest F&R businesses in the country", said Hindustan Unilever chairman and CEO Sanjiv Mehta. Its product portfolio, with a long history in India, is supported by strong nutritional claims.

The average growth rate has been double digit over the last decade.

Unilever said the 3.3 billion euros ($3.75 billion) it was paying would be paid in cash and shares in its subsidiary in India, Hindustan Unilever Limited (HUL). The merger values GSK Consumer Healthcare India at ₹31,700 crore, or ₹7,540 per share. This will come about from a combination of supply chain efficiencies, operational improvements, go-to-market and distribution network optimization and streamlining of overlapping infrastructure. Following the issue of new HUL shares, Unilever's shareholding in the merged entity will come down to 61.9 per cent against 67.2 per cent prior to the merger. The brand accounted for 45% of India's health drink market in 2017, according to consulting firm RedSeer. The transaction is expected to be completed in one year, subject to shareholder and regulatory approvals. The scale of Unilever's India business-which is also its fastest growing-appears to have dimmed the chances of other suitors in the fray.

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