Unilever Emerges Winner, Clinches Horlicks and 3.3 Billion Euros Business
In a deal that will create new paths for India in the F&R industry, India's homegrown HUL merges with UK's food unicorn
India’s Hindustan Unilever (HUL) has emerged a unique winner after it clinched a mega deal in which it will merge with India’s market leader in the food category, GlaxoSmithKline. HUL will acquire the consumer business at an equity of INR 31,700 crore with 4.39 shares being allotted for every share. The proposed strategic merger will mark HUL's entry into health food drinks category.
The Association Goes Long back
Founded in 1924, GlaxoSmithKline is a UK-based pharmaceutical company which has the likes of Horlicks and Boost under its umbrella. In India, it is a famous market trailblazer with a turnover of about INR 2,729 cr with 3.55 per cent market share. India’s this move of taking over the nutrition business from the celebrated GSK will give it a boost in the international market as well an entry into the European food industry. HUL’s chief rival remains Nestle and Coca-Cola, brands that are much consumed and liked by the Indian millennials.
HUL CMD Sanjiv Mehta, in a statement, highlighted the what is merger proposes to offer in the upcoming times, “With this proposed strategic merger with GSK Consumer Healthcare India, we will be expanding our portfolio with great brands into a new category catering to the nutritional needs of our consumers. I’m confident that this merger will create significant shareholder value through both revenue growth and cost synergies.”
He also added, “The turnover of our F&R (food and refreshment) business will exceed INR 10,000 crore 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.”
A Startling Presence
It is important to note that Horlicks conveniently dominates the drinks market as well. A startling yet amazing aspect about it is that it has its presence in other Asian countries such as Bangladesh, Malaysia and Sri Lanka as well but its maximum revenue is derived solely from the India market. India with its vast youth population and myriad tastes and preferences has always accepted this unicorn of the F&R industry with open arms. GSK consumer healthcare also has a Sensodyne brand in India.
GSK’s Chief Strategy Officer David Redfern in an interview with Indian television channel CNBC-TV18 said this is a very good deal for GSK shareholders and he hoped that the prices of the shares for HUL increase over the time. He also said that combining the distribution power of HUL with GSK can definitely result in better returns.
Unilever will also acquire an 82 per cent stake in GSK Bangladesh for 150 million euros and brand rights and GSK's consumer healthcare nutrition activities in certain territories for 416 million euros in cash, the statement said.