By James Mathew
Hindustan Unilever Ltd says it will merge with GlaxoSmithKline Consumer Health in a deal worth $4.52bn
FMCG major Hindustan Unilever Ltd (HUL) announced on Monday it would merge with GlaxoSmithKline Consumer Health (GSKCH) in a deal worth Rs 31,700 crore ($4.52 billion).
In one of the largest M&A deals in India’s consumer goods market, the all equity merger will involve 4.39 shares of HUL being allotted for every share in GSKCH India.
The deal also envisages transfer of GSK’s entire operations of nutrition business and contract to distribute the latter's over-the-counter and oral care brands such as Sensodyne, Eno and Crocin to HUL
“With this proposed strategic merger with GSKCH India, we will be expanding our portfolio with great brands into a new category catering to the nutritional needs of our consumers," Sanjiv Mehta, chairman, HUL, said in a statement.
The statement also said the merger will create significant shareholder value through both revenue growth and cost synergies for HUL.
"The turnover of our food and refreshment business will exceed Rs10000 crore ($1.42 billion) and we will become one of the largest F&R businesses in the country,” Mehta said.
GSK Consumer India business had a turnover of about Rs 4200 crore ($600 million) in the year ended March 2018, primarily through its Horlicks and Boost brands.
GlaxoSmithKline chief executive Emma Walmsley announced in March a strategic review of Horlicks and its other consumer healthcare nutrition products, adding that the company was exploring a partial or full sale of its stake in Indian subsidiary GSK Consumer Healthcare by the year end.
Horlicks is by far the market leader in the malt-based beverages segment with 43 percent market share, followed by Mondelez International's Bournvita, which has around 13 percent share.
Growth of malt beverage segment has been witnessing a slowed down over the past few years in India, with the market seeing a shift in consumer preference to specialized products made by nutraceuticals companies