Health Care

Unilever to buy GSK's Indian Horlicks business for $3.8bn

Unilever to buy GSK's Indian Horlicks business for $3.8bn”

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

The second-biggest deal by value in the consumer goods space is that of Diageo picking up majority stake in United Spirits.

The deal comprises three major transactions-an all-stock acquisition of GSK Consumer Healthcare India (GSK CH India), an all-cash acquisition of GSK Bangladesh, and the acquisition of other commercial operations and assets outside India.

As per a definite agreement reached by HUL with GSK CH India, 4.39 shares of HUL will be allotted for every share in GSK CH India.

GSK HFD is the undisputed leader in the Health Food Drinks category in India, with iconic brands such as Horlicks and Boost, and a product portfolio supported by strong nutritional claims.

"The acquisition is transformative for our foods and refreshment business, allowing us to enter the health food drink category, further strengthening our position in health and wellness".

While fresh shares of HUL will be issued to GSK Plc, it will result in Unilever's shareholding in HUL declining to 61.9 per cent from 67.2 per cent prior to the merger with GSK Consumer Healthcare.

Hindustan Unilever Ltd (HUL), the Indian subsidiary of consumer goods giant Unilever, has agreed to acquire GlaxoSmithKline's (GSK) key consumer nutrition brands in India including Horlicks, Maltova and Boost. HUL expects that the transaction will take its food and refreshment business to Rs 10,000 crore turnover.

"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".

As per the deal, GSK Consumer's shareholders would get 4.39 shares of Hindustan Unilever's shares for each share they held in GSK consumer Healthcare, a regulatory filing by Hindustan Unilever said.

The average growth rate has been double digit over the last decade. The scale of Unilever's India business-which is also its fastest growing-appears to have dimmed the chances of other suitors in the fray. This transaction values the total business at Rs 317 bn.

Post synergies, the implied EV/EBITDA multiple for the transaction would be below 20 times. The brand accounted for 45% of India's health drink market in 2017, according to consulting firm RedSeer.

However, the acquisition is subject to obtaining requisite approvals from statutory authorities and shareholders, HUL said in a statement. We believe Unilever is well placed to maximise its future potential.



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