Unilever buys GSK Asian health drinks arm for 3.3 bn euros

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Apart from selling the consumer healthcare business in India, GSK is also selling 82 per cent stake in its unit in Bangladesh and brand rights for GSK's consumer healthcare nutrition activities in few other markets to Unilever separately, for 566 million GBP in cash.

Emma Walmsley, chief executive officer of GSK, said: "Horlicks has made a significant contribution to GSK and to the health of consumers across India for many decades".

In 2018, the GSK Health Food Drinks portfolio delivered a turnover of around €550m ($628m), primarily through the Horlicks and Boost brands. Nearly 90% of the turnover is in India.

"With this proposed strategic merger with GSK CH India, we will be expanding our portfolio with great brands into a new category catering to the nutritional needs of our consumers". Horlicks products have been an everyday staple in South Asian households across generations.

Horlicks comfortably dominates the health-drinks market in India and Unilever is expected to try and give it a fresh lease of life, following a slowdown in sales growth in recent years.

"HUL has reached a definite agreement with GSKCH India in this regard", the company said in a statement. 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. Improving the health and well-being of one billion people by 2020 is a key pillar in our Unilever Sustainable Living Plan.

The all-stock deal, which is valued at ₹317 billion ($4.5 billion), will see HUL take over GSK's consumer healthcare operations and merge them with itself.

Although Horlicks brand in England is 140 years old and in the deal with HUL, the company's business in England will not be affected. The merger values GSK Consumer Healthcare India at ₹31,700 crore, or ₹7,540 per share. Sanjiv Mehta, chairman and CEO, HUL, said: "It will add huge amount of lustre to the great brands we already have in our portfolio".

The deal covers India, Bangladesh and 20 other markets: predominantly in Asia but also covering Australia, New Zealand, Kenya, the Maldives and the Middle East.

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 has reiterated that India will remain a priority market and that it will continue to invest in growth opportunities in its OTC and oral healthcare brands such as Crocin, Eno, Iodex and Sensodyne.

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