Hindustan Unilever (HUL) on Monday made a healthy stride in the country's food and refreshment segment with its parent Unilever Plc acquiring Horlicks and other brands from GSK Consumer for 3.3 billion euros.
Horlicks in India and global markets, including Bangladesh and 20 other markets, will become a Unilever brand.
The second-biggest deal by value in the consumer goods space is that of Diageo picking up majority stake in United Spirits. GSK Consumer Healthcare and HUL have agreed to a share exchange ratio of 4.39 shares of HUL for every one share of GSK Consumer India, the two companies said in separate filings with the stock exchanges.
Unilever announced this morning that it has bought GSK's health food drinks portfolio in India, Bangladesh and 20 other predominantly Asian markets. HUL's top management said it will unlock significant synergies from the merger both from revenue and costs.
"The turnover of our food and refreshment (F&R) business will exceed ₹10,000 crore and we will become one of the largest F&R businesses in the country".
Incidentally, GSK CH is the leader in the HFD segment with over 60% of the market share of which Horlicks alone commands a share of almost 50%.
'GSK's health drinks portfolio is the undisputed leader.in India, with iconic brands such as Horlicks and Boost and a product portfolio supported by strong nutritional claims, ' the London and Rotterdam-based group added.
"The acquisition of Horlicks is transformative for our F&R business", Unilever president (food & refreshment) Nitin Paranjpe said.
Originally introduced in the 1930s, Horlicks products have a long history in India.
The average growth rate has been double digit over the last decade. "We look forward to welcoming new brands and great talent into the Unilever and HUL family, once the transaction is complete", says Sanjiv Mehta, chairman and managing director, HUL. But Unilever says the category is still "under-penetrated" in India and has the opportunity to grow. HUL is well positioned to further develop the market given the extent of its reach and capabilities.
GSK CH India posted a turnover of Rs 4,200 crore in 2017-18, a large part of which was contributed by Horlicks and Boost. This will come about from a combination of supply chain efficiencies, operational improvements, go-to-market and distribution network optimization and streamlining of overlapping infrastructure. "The transaction is subject to the satisfaction or waiver of the conditions precedents in the SPA (including necessary regulatory formalities and approval in accordance with the laws of Bangladesh)". We believe Unilever is well placed to maximise its future potential.