Unilever to acquire Horlicks and GSK's Health Food Drinks portfolio

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A plan by Hindustan Unilever Ltd.'s parent to buy GlaxoSmithKline Plc's Indian consumer business for 3.3 billion euros ($3.8 billion) in cash and shares is positive for the local unit's earnings, according to analysts, even as the price tag is said to be about $1 billion more than rival Nestle SA's offer. Horlicks was originally introduced in India in the 1930s.

The second-biggest deal by value in the consumer goods space is that of Diageo picking up majority stake in United Spirits.

The deal comprises three major transactions - an all-stock acquisition of GSK Consumer Healthcare India (GSK CH India), an all-cash acquisition of GSK Bangladesh, and the acquisition of certain other commercial operations and assets outside India. GSK's health food portfolio includes popular brands Horlicks and Boost. The company's turnover of its food and refreshment business would surpass Rs. 10,000 crore, placing it among the largest F&R businesses in the country.

GSK Consumer's brands Horlicks, Boost, Viva and Maltova brands will now be a part of HUL's portfolio.

The Board of Directors of Hindustan Unilever (HUL) has approved a scheme of amalgamation between the company and GlaxoSmithKline Consumer Healthcare (GSK CH India) subject to obtaining requisite approvals from statutory authorities and shareholders.

"The acquisition of Horlicks is transformative for our F&R business", Unilever president (food & refreshment) Nitin Paranjpe said. Its product portfolio, with a long history in India, is supported by strong nutritional claims. "We look forward to welcoming new brands and great talent into the Unilever and HUL family, once the transaction is complete", Mehta said.

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Apparently, this has been touted to be the largest consumer goods deal in the country - an all-equity merger one, which allegedly involves an exchange ratio of 4.39 HUL shares for each share of GSK Consumer India.

'Despite this, the category still remains under-penetrated in India, ' it said.

By utilising HUL equity to fund the Indian component of the transaction, together with the synergies outlined above, Unilever shareholders are expected to benefit from returns well in excess of the cost of capital from the fourth year. The deal values the total business of GSK India at Rs 31,700 crore.

"HUL has reached a definite agreement with GSKCH India in this regard", the company said in a statement.

"We expect this business to grow in double digit over the medium term".

It also says: "To sell and dispose 9,875,144 shares in the company to Unilever".

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