Unilever, the Anglo-Dutch consumer goods major, is understood to have inched ahead of rival Nestle in the race to acquire health food drinks brand Horlicks from GlaxoSmithKline Consumer Healthcare.
In March this year, GlaxoSmithKline Plc (GSK), the parent of GSK Consumer Healthcare, had said its 72.5 per cent stake in the domestic arm will be put up for sale to fund the purchase of a 36.5 per cent stake in the consumer healthcare venture of Novartis.
As part of the process, it had initiated a strategic review of the Horlicks brand. This strategic review is expected to be completed by the end of this calendar year and includes the Boost brand as well.
GSK had, however, pointed out that India will remain a priority market and that it will continue to invest in growth opportunities in its OTC and oral healthcare brands that include Sensodyne and Eno.
GSK’s announcement of the strategic sale of Horlicks brand had generated interest from majors such as Coca-Cola, ITC, Reckitt Benckiser and private equity fund KKR. However, Unilever and Nestle were the two players that were finally in the fray.
The Financial Times reported on Wednesday that Unilever and GSK were in exclusive talks and that the former had beat a rival bid from food and beverage giant Nestle. The speculation is that the transaction will be done at a valuation of $4 billion. Shares of GSK Consumer Healthcare ended 1.32 per cent higher on the Bombay Stock Exchange on Wednesday. It has a market capitalisation of over Rs 30,000 crore.
For Unilever, the acquisition of Horlicks will be a major addition to its product portfolio in India. Its domestic subsidiary —Hindustan Unilever — operates across four major categories: food & drink, home care, personal care and water purifier.
According to GSK, Horlicks continues to be at the top position in the health food drinks category with a volume market share of 49.5 per cent and a value market share of 43.3 per cent.
The transaction will be closely watched particularly after the mega deal last month when Zydus Wellness and its parent Cadila Healthcare jointly acquired Heinz India — a subsidiary of Kraft Heinz — in a deal worth Rs 4,595 crore. One of the brands that came into the Ahmedabad-based group’s fold was Complan.
During the second quarter ended September 30, GSK Consumer Healthcare recorded a growth of 14.4 per cent in revenues at Rs 1,272 crore. Profits came in at Rs 275.49 crore against Rs 192.41 crore in the year-ago period.
On the other hand, these numbers in the case of Boost stood at 13.9 per cent and 10.9 per cent respectively.
