Monday, 18 February, 2019
  • Medicine
  • Hindustan Unilever to merge with GSK Consumer Healthcare

Hindustan Unilever to merge with GSK Consumer Healthcare

GSK share price Group divests Horlicks business to Unilever Unilever invests in India with €3.3bn deal for GlaxoSmithKline's Horlicks
Ben Pena | 05 December, 2018, 16:25

In exchange, GSK will get a 5.7% stake in HUL, which is valued at ₹230 billion, and hence, become the second-largest shareholder in the company.

Following the issue of new HUL shares, Unilever's holding in HUL will be diluted from 67.2 percent to 61.9 percent, it added.

GSK CH India is the market leader in the HFD category, with brands such as Horlicks and Boost. Nearly 90 per cent of the turnover is in India. Its product portfolio, with a long history in India, is supported by strong nutritional claims. Horlicks products have been an everyday staple in south Asian households for generations.

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. HUL is well positioned to further develop the market given the extent of its reach and capabilities.

Unilever head of food and refreshment Nitin Paranjpe said: "We are delighted to be acquiring the GSK health food drinks portfolio". Boost is a malt-based food drink in chocolate flavour.

The deal reflects a push by global companies to cash in on India's fast growing economy, including sectors such as retail, consumer goods and technology.

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In a similar context, Citi said that even without the synergy benefits, the merger would add around 3.7% to the EPS, in its FY21 estimates for HUL.

In one of the year's largest deals, FMCG major HUL on Monday said it will merge GlaxoSmithKline Consumer Healthcare with itself in an-all equity transaction pegged at ₹31,700 crore.

The logo for Unilever appears above a trading post on the floor of the New York Stock Exchange.

ALSO READ: Will $3.8 bn-worth HUL-GSK deal profit India unit? However, after the deal is completed at the end of 2019, by which time HUL will be India's largest publicly-listed food and refreshments company, GSK plans to sell its stake in HUL in what is expected to be a very profitable cash-out.

Significantly, Horlicks took entry in India with the British Army after World War I (1914-18). 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.

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