Unilever to swallow GSK’s Indian Horlicks business

Ebony Scott
December 5, 2018

Anglo-Dutch FMCG giant Unilever on Monday said it will acquire health food portfolio, including popular brands Horlicks and Boost, from GSK in India and over 20 other markets for £3.1 billion (about Rs 27,750 crore).

Hindustan Unilever shares gained 4.12 percent to close at Rs 1,825.90 Monday after the company chose to merge Glaxosmithkline Consumer Healthcare with itself. GSK CH India's 3,800 employees will become HUL staff after the merger.

GlaxoSmithKline PLC (LON:GSK) has completed the sale of its Indian Horlicks nutrition business to fellow FTSE 100 firm Unilever plc (LON:ULVR), boosting the latter's position in the emerging market.

The exchange ratio for the merger is 4.39 equity shares of HUL for every share of GSK Consumer Healthcare Limited.

Sanjiv Mehta, Chairman of Hindustan Unilever, was quoted saying that through this merger, the company would be growing its portfolio with notable brands into a new category to cater to the nutritional needs of its consumers.

GSK will also sell its 82% stake in GlaxoSmithKline Bangladesh Limited to Unilever.

It is to be noted that almost 85-90% of total Horlicks sales come from the India market.

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

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The businesses being divested, which include health drinks Horlicks, Maltova and Boost, brought in a total of £406 million (₹36.4 billion) in sales in the nine months ended September 2018. I am confident that this merger will create significant shareholder value through both revenue growth and cost synergies.

HUL will also distribute GSK's over-the-counter and oral healthcare products like Crocin and Sensodyne for a period of five years as part of a preliminary move into the pharmaceuticals space.

It is estimated that the malt-based drinks category will grow to Rs 119 billion by calendar year 2022, from Rs 77 billion, last year.

'Despite this, the category still remains under-penetrated in India, ' it said.

Despite this, Unilever says that the Indian market still presents further opportunities for growth, and it will leverage its expertise and market position to further develop he market.

Speaking of the oncology deal meanwhile, Tesaro chief executive Lonnie Moulder said the "transaction marks the beginning of a new global partnership that will accelerate our oncology business and allow our mission of delivering transformative products to individuals living with cancer". Yesterday, it had said it would put together a restructuring team once it gets shareholders' and regulatory approvals.

Market circles said with Unilever buying the Horlicks brand, HUL will have to pay royalty to the parent for sales in India.

Other reports by GizPress

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