Unilever gets the taste of Horlicks, will acquire GSK health food portfolio for 3.1 bn pound

Puttin all speculations at rest, anglo-Dutch FMCG giant Unilever said that it will be acquiring GlaxoSmithKline's (GSK) health food and drinks portfolio in India and over 20 other markets for whopping 3.1 billion pound.

As part of the transaction, Unilever's Indian arm, Hindustan Unilever Ltd (HUL) will acquire GlaxoSmithKline Consumer Healthcare Ltd (GSK CH India) via an all-equity merger, valuing the total business of the latter at Rs 31,700 crore.

GSK CH India is the market leader in the health food drinks (HFD) category, with popular brands such as Horlicks and Boost.

Announcing the deal that also covers "Bangladesh and 20 other predominantly Asian markets", Unilever said the transaction consists of an all-equity merger of HUL with the publicly-listed GSK Consumer Healthcare India and acquisition of 82 per cent stake in GSK Bangladesh Ltd.

It also includes acquisition of certain other commercial operations and assets outside India, it added.

HUL said its board has given nod for the all-equity merger of GSK CH India, under which with 4.39 shares of HUL will be allotted for every share in GSK CH India.

"The iconic Horlicks brand has a deep heritage, credibility and resonance around the world. 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," Unilever President, Food & Refreshment Nitin Paranjpe said.

Hindustan Unilever Chairman and CEO Sanjiv Mehta said with the strategic merger the company will be expanding its portfolio through "great brands into a new category catering to the nutritional needs of our consumers".

"The turnover of our foods and refreshments (F&R) business will now exceed Rs 10,000 crore and we will become one of the largest F&R businesses in the country," Mehta said.

HUL CFO Srinivas Pathak said at present the company's F&R business is at around Rs 2,400 crore.

"We expect this business to grow in double digit over the mediun term. This would be a significant opportunity," he added.

Stating that "Horlicks has made a significant contribution to GSK and to the health of consumers across India for many decades", GSK CEO Emma Walmsley said: "We believe Unilever is well placed to maximise its future potential".

She further said that proceeds from this transaction will be used to support the group's strategic priorities, including investing in our pharmaceutical business.

GSK said India remained an important market for it and the company will continue to invest in growth opportunities for its OTC and Oral Health brands there, which include Crocin, Eno and Sensodyne.

"Following completion of the transaction, HUL will distribute GSK's OTC and Oral Health brands, that are currently distributed by GSK India," it said, adding this arrangement will be for a period of five years.

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GSK said the transaction is conditional on the approval of the merger by the shareholders and creditors of each of GSK India and HUL. 

Both GSK and Unilever, which hold 72.5 per cent and 67.2 per cent of the shares in GSK India and HUL, respectively, intend to vote in favour of the merger, it added.