India’s biggest pure-play consumer goods firm Hindustan Unilever, said it will merge GlaxoSmithKline Consumer with itself for a transaction that values Rs 31,700 crore in the country’s largest deal within consumer goods market
Bengaluru, 03 Dec, 2018. RedNewswire/-
HUL board has approved the scheme of amalgamation with GSK Consumer India, under which the two companies will merge. HUL will get to acquire GSK Consumer’s Horlicks and other brands for as much as $3.75 billion.
The merger includes the totality of operations within GSK Consumer Healthcare India, including a consignment selling contract to distribute GSK Consumer’s over-the-counter and oral health products in India, the company said in a statement.
The two companies have agreed to a share exchange ratio of 4.39 shares of HUL for every one share of GSK Consumer India. The deal values GSK Consumer India at Rs 31,700 crore and is expected to be complete in 12 months.
GSK Consumer Healthcare India is the market leader in the health food category, with iconic brands such as Horlicks and Boost, and a product portfolio supported by strong nutritional claims.
HUL CMD Sanjiv Mehta said in a statement, “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.The turnover of our food and refreshment business will exceed Rs10000 crore and we will become one of the largest F&R businesses in the country.”
GSK had earlier said that it is looking to increase focus on OTC and oral health categories, according to a statement by GSK. GSK’s products in this category include Sensodyne toothpaste, Eno antacid, Panadol headache tablets, muscle gel Voltaren and Nicotinell patches.
Notably, nearly 85-90% of total Horlicks sales come from the India market.
This year, HUL combined its foods and refreshments business into a single division in an effort to increase agility. The combined business including Knorr soup, Kissan Jam, Bru coffee, Lipton tea and Magnum ice-cream accounted for Rs 6,328 crore, or less than a fifth of HUL’s overall sales in FY18.