Unilever has fended off competition from companies including Coca-Cola, Nestlé and Kraft Heinz to acquire GlaxoSmithKline’s (GSK) Indian arm and the Horlicks brand for approximately €3.3 billion.
This agreement will see Unilever acquire GSK’s Health Food Drinks portfolio (GSK HFD) in India, Bangladesh and 20 other predominantly Asian markets, which includes brands such as Horlicks and Boost.
The deal will give Unilever a significant presence in the growing Indian market, and represents one of the biggest transactions made under departing CEO Paul Polman, who announced he would be stepping down from his position last week.
Hindustan Unilever (HUL) will acquire GSK’s Consumer Healthcare India unit and an 82% stake in GSK Bangladesh Limited as part of the transaction, which has been made in cash and through the issue of 5.7% of the shares in HUL, which GSK said that it intends to sell once the transaction has been completed.
GSK originally announced its intention to offload its Horlick’s brand in July 2017 as part of a restructuring effort, shifting its focus to its pharmaceuticals sector.
The Horlicks brand now makes most of its sales in India, where the product is given as a breakfast drink to children, and Unilever says that over the last 15 years GSK HFD’s portfolio has grown at a double-digit rate.
Despite this, Unilever says that the Indian market still presents further opportunities for growth, and it will leverage its expertise and market position to further develop he market.
Unilever’s head of food and refreshment Nitin Paranjpe said: “We are delighted to be acquiring the GSK health food drinks portfolio.
“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.
“It is rare to be able to acquire brands with such leading market positions and fantastic consumer equity in one of the world’s most exciting and fast-growing markets.”
Sanjiv Mehta, chairman and CEO, Hindustan Unilever added: “With this strategic merger of Hindustan Unilever and GSK Consumer Healthcare India Limited, we will be expanding our portfolio through great brands into a new category catering to the nutritional needs of our consumers.
“I am confident that this merger will create significant shareholder value through both revenue and cost synergies. The turnover of our Foods & Refreshments business will now exceed Rs.100bn and we will become one of the largest F&R businesses in the country.
“We look forward to welcoming new brands and great talent into the Unilever and HUL family, once the transaction is complete.”
Emma Walmsley, GSK’s CEO said: “Horlicks has made a significant contribution to GSK and to the health of consumers across India for many decades and we believe Unilever is well placed to maximise its future potential.
“Proceeds from this transaction will be used to support the Group’s strategic priorities, including investing in our pharmaceutical business.”
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