GSK sells Horlicks for €3.3bn to Unilever

Anglo-Dutch group  Unilever has agreed to pay €3.3bn for GlaxoSmithKline’s consumer nutrition business, spreading their wings  in India with malted beverage Horlicks.

The deal is likely to be the last major milestone  on the Anglo-Dutch giant by its veteran CEO Paul Polman before he retires in January 2019.

Unilever fought of tough competition from Nestle and Coca-Cola to win the auction. It fund the acquisition largely through shares of its listed Indian subsidiary Hindustan Unilever and limit cash outlay to about €639m. This was rare chance to acquire a fast-growing product in an emerging market where consumer’s diets are changing as income per head grows.  The business has annual sales of €550m, derived from Boost and Horlicks brands.

Nitin Paranjape, head of Unilever’s food and refreshment business, said Horlicks still had room to grow once they put marketing muscle behind it, especially in emerging markets in Africa and South-east Asia. He added that the strong performance of the Hindustan Unilever shares – which are up 45 per cent in the past year – meant that the group had chosen to use them as the acquisition currency: “ We are using the paper in India to create value.”

The deal structure calls for GSK’s publicly traded GSK Consumer Healthcare India to be merged with Hindustan Unilever, with shareholders in the former receiving 4.39 shares in Hindustan Unilever for each of their shares. Unilever will also acquire GSK’s Bangladesh business and certain other assets outside India for a combined value of €639m.