Published: Wed, December 05, 2018
Health Care | By Cedric Leonard

Unilever wins race for GSK’s health drinks biz

Unilever wins race for GSK’s health drinks biz

Hindustan Unilever (HUL) on Monday made a healthy stride in the country's food and refreshment segment with its parent Unilever Plc acquiring Horlicks and other brands from GSK Consumer for 3.3 billion euros.

Since being introduced in the 1930s, Horlicks has built up a strong following in India.

The second-biggest deal by value in the consumer goods space is that of Diageo picking up majority stake in United Spirits. "I am confident that this merger will create significant shareholder value through both revenue growth and cost synergies", said Sanjiv Mehta, chairman and managing director, HUL. The company's turnover of its food and refreshment business would surpass Rs. 10,000 crore, placing it among the largest F&R businesses in the country.

Shares of GSK Consumer Healthcare closed 3.75% higher at Rs 7,542.85 apiece on the BSE while those of HUL ended the session up 4.12% at Rs 1,825.90.

The transaction is an all-equity merger with 4.39 shares of HUL being allotted for every share in GSKCH India, which sells consumer healthcare products, including popular drink brand Horlicks.

Unilever will also acquire the commercial operations in 20 other predominantly Asian markets and the intellectual property rights for a total consideration of c.€470m in cash.

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Horlicks has a long history in India - which accounts for nearly 90 percent of the GSK arm's turnover in Asia - having been introduced there in the 1930s. "We look forward to welcoming new brands and great talent into the Unilever and HUL family, once the transaction is complete".

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

It was taken to India by soldiers who had fought with the British Army in the First World War.GSK was advised by Morgan Stanley and Greenhill, while BofA Merrill Lynch worked with Unilever. GSK said it will sell its holding in HUL and this will be done in tranches, taking into account market conditions.

Unilever acquired GlaxoSmithKline's business and will merge its Indian unit with HUL in a deal worth $3.8 billion.

As a part of the agreement, HUL, which makes the Surf detergent, Lux soap and Red Label tea, will merge GlaxoSmithKline Consumer Healthcare, giving it access to health food brands like Boost, Viva and Maltova. We expect the business to grow in double-digits in the medium-term and margins to be accretive to HUL post realisation of synergy benefits, HUL said in a release.

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