Unilever has announced on Monday (3) that it has signed an agreement to acquire the Health Food Drinks portfolio (GSK HFD) of GlaxoSmithKline (GSK) in India, Bangladesh, and 20 other predominantly Asian markets.
The transaction consists of three elements including, all-equity merger of Hindustan Unilever Ltd (HUL) with the publicly listed GSK Consumer Healthcare India (GSK CH India), acquisition of 82 per cent stake in GSK Bangladesh Limited (GSK Bangladesh), and acquisition of certain other commercial operations and assets outside India, said Unilever in a statement.
Unilever’s share of the total consideration is €3.3 billion payable using a combination of cash, and shares in its listed subsidiary in India, Hindustan Unilever Limited.
In 2018, the GSK HFD portfolio delivered a total turnover of c.€550m, primarily through the Horlicks and Boost brands. Almost 90 per cent of the turnover is in India.
The merger of HUL with GSK CH India will be on the basis of an exchange ratio of 4.39 HUL shares for each GSK CH India share.
This implies a total equity value of Rs 317bn (€3.96bn) for 100 per cent of GSK CH India and represents a premium of c. five per cent, based on the 15-day VWAP of both the respective shares ending November 30, 2018. Following the issue of new HUL shares, Unilever‘s holding in HUL will be diluted from 67.2 per cent to 61.9 per cent.
The merger includes the totality of operations within GSK CH India, including a consignment selling contract to distribute GSK’s over-the-counter and oral health products in India.
Unilever will acquire, for cash, 82 per cent of the shares of the publicly listed GSK Bangladesh Limited at an equity value of c.€169m.
Unilever will also acquire the commercial operations in 20 other predominantly Asian markets and the intellectual property rights for a total consideration of c.€470m in cash.
The total consideration for the transaction is c.€4.6bn, of which Unilever‘s implied contribution through both cash and through the issue of shares in HUL, its listed subsidiary in India, totals c.€3.3bn.
Nitin Paranjpe, president, Food and Refreshment, Unilever, said, “we are delighted to be acquiring the GSK Health Food Drinks portfolio. The iconic Horlicks brand has a deep heritage, credibility and resonance around the world. The acquisition is transformative for our Foods and Refreshment business allowing us to enter the Health Foods Drinks category, further strengthening our position in health and wellness.”
“It is rare to be able to acquire brands with such leading market positions and fantastic consumer equity in one of the world’s most exciting and fast-growing markets. Improving the health and well-being of one billion people by 2020 is a key pillar in our Unilever Sustainable Living Plan. Horlicks and Boost will add to our stable of purpose-driven brands that help consumers to get more out of their lives,” Paranjpe added.