Unilever buys GSK's Indian Horlicks business for 3.3 billion Euros

Mumbai, December 4: India’s largest consumer goods company Hindustan Unilever Ltd (HUL) is set to become the country’s largest listed foods company, powered by a ₹31,700 crore all-stock acquisition of GlaxoSmithKline Consumer Healthcare Ltd that will give the local unit of Unilever brands such as Horlicks, Boost and Viva.

 

The move would also help HUL make its most ambitious foray into the health and wellness space, chairman Sanjiv Mehta said. In addition, HUL will enter into a five-year contract to distribute GSK Consumer’s over-the-counter and oral health products.

“Let’s look at it from a point of a consumer—health, wellness is a big need. If you look at the nutrition deficiencies, it is massive. This squarely fits into that space. From a strategic point of view, it makes immense sense for us to get into this category. It’s a great strategic fit,” Mehta told reporters.

The market for health food drinks in India is estimated at ₹7,000 crore, according to HUL, with Horlicks accounting for around 60% of volume.

“We have very carefully examined their strengths, the claims that we will be able to make, the nutritional properties in the brand, the product, and there is a huge opportunity,” Mehta said. “Its penetration is low, but we are in a business which knows how to do market development. We are a business which knows how to do premiumization.”

This transaction values GSK Consumer at ₹31,700 crore. HUL will issue 4.39 of its own shares for every share of GSK Consumer. Following the issue of new HUL shares, Unilever’s holding in HUL would drop from 67.2% to 61.9%, the company said.

HUL will also market and distribute some brands of GSK Healthcare such as Sensodyne, Otrivin, Crocin and Eno.

“HUL will take on the distribution of all of this under a five-year contract. They get the benefits of what we do with our distribution and reach,” said Srinivas Pathak, chief financial officer, HUL. “For us, it gives us a sense of the pharma channel and a better understanding of that business.”