Unilever acquires Horlicks from GSK in “strategically attractive” move to emerging Indian market

02 Apr 2020 --- GlaxoSmithKline (GSK) has completed its divestment of its consumer healthcare nutrition products alongside its malted milk hot beverage powder Horlicks in India to Unilever for cash proceeds equivalent to £397 million (US$492.5 million), making for an EBITA of £114.5 million (US$142.0 million). It also follows the completion of GSK’s merger of its Indian listed entity, GlaxoSmithKline Consumer Healthcare Limited and Hindustan Unilever Limited (HUL). The move aligns with Unilever’s strategy of increasing its presence in health-food categories. At the same time, GSK states it looks forward to investing in its listed pharmaceuticals business and its over-the-counter (OTC) and oral health brands in India.

“Horlicks is a hugely popular brand in India with a strong growth track-record and it has made a significant contribution to GSK and the health of consumers across India for many decades. The sale of this brand – and other consumer healthcare nutrition products – supports the funding of GSK’s buyout of Novartis’s stake in their Consumer Healthcare Joint Venture and enables GSK to drive increased focus on its OTC and Oral Health categories,” Eleanor Bunch, Director, Global External Communications at GSK tells NutritionInsight.

“The close of this transaction signals the beginning of an exciting new chapter for GSK in India. It enables us to make our portfolio of science-based OTC and Oral Health brands available to more consumers across the country,” adds Brian McNamara, CEO of GSK Consumer Healthcare.

As part of the transaction, HUL will distribute GSK’s Consumer Healthcare brands under its pharmaceutical business umbrella, which include Sensodyne (dental care), analgesic Crocin, Otrivin (nasal congestion) and antacid Eno, for GSK in India. GSK will continue to be responsible for demand generation, portfolio strategy, R&D and marketing for these brands.

Unilever will maintain a 67.2 percent stake in the Consumer Healthcare agreement and a 82 percent stake acquisition in GSK Bangladesh Limited. Besides a £397 million GSK Consumer Healthcare turnover, the GSK Bangladesh acquisition also resulted in a £39.6 million (US$49.1 million) turnover.

Horlicks product range.A strategic fit
Upon the announcement of the merger and acquisition, Nitin Paranjpe, President, Food & Refreshment, Unilever, stated the global FMCG giant was “delighted” to be acquiring the GSK Health Food Drinks portfolio. 

“The iconic Horlicks brand has a deep heritage, credibility and resonance around the world. It is rare to be able to acquire brands with such leading market positions and fantastic consumer equity in one of the world’s fast-growing markets. Horlicks and Boost will add to our stable of purpose-driven brands that help consumers to get more out of their lives,” Paranjpe explains. 

A Unilever Food & Refreshment report further identified the Horlicks takeover as a “good strategic fit” that “aligns with [its] Health & Wellness portfolio,” and “provides scale to the Indian Food & Refreshment” sector. Over the medium term, Unilever expects to see more than 10 percent growth in this sector as a result of the GSK transactions, as well as a 10 percent margin improvement.

Other contenders
The race for the Horlicks acquisition ended in 2018, among previous reports that both Nestlé and Unilever were vying for GlaxoSmithKline Plc’s nutrition business after months of speculation over who would take on the brand. The race for Horlicks was previously thought also to include another suitor, Coca-Cola, which was believed to be looking into expanding in emerging markets as US growth slowed. At one point, Kraft Heinz was also reported to be an interested party. 

As part of a major UK review, GSK announced it was making strategic decisions concerning its consumer healthcare business and pharmaceuticals, including options to divest some nutrition brands and its intention to sell its Horlicks brand in the UK.

Last August, GSK completed its transaction with Pfizer to combine their consumer healthcare businesses into what they tout as a “world-leading joint venture.” This unites two highly complementary portfolios of consumer health brands, including GSK’s Sensodyne, Voltaren and Panadol and Pfizer’s Advil, Centrum and Caltrate.   

Recently, GlaxoSmithKline (GSK) donated US$10 million to the COVID-19 Solidarity Response Fund. GSK Consumer Healthcare is prioritizing actions in its supply chain to deliver more products that are in high demand, such as multi-vitamins and dietary supplements.

Edited by Anni Schleicher