Unilever to acquire Horlicks in US$3.8bn GSK Health Food Drinks portfolio deal

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03 Dec 2018 --- Unilever has emerged as the winner in the bid to acquire hot drink brand Horlicks, by signing an agreement to acquire the Health Food Drinks portfolio (GSK HFD) of GlaxoSmithKline (GSK) in India, Bangladesh and 20 other predominantly Asian markets. Unilever’s share of the total consideration is US$3.8 billion (€3.3 billion) and the company notes that the transaction is aligned with its strategy which seeks to increase its presence in health-food categories and high-growth emerging markets.

The transaction consists of three elements:

  • All-Equity Merger of Hindustan Unilever Ltd (HUL) with the publicly listed GSK Consumer Healthcare India (GSK CH India).
  • Acquisition of a 82 percent stake in GSK Bangladesh Limited (GSK Bangladesh).
  • Acquisition of certain other commercial operations and assets outside India.

Last year, the GSK HFD portfolio delivered a total turnover of US$623 million (€550 million), primarily through the Horlicks and Boost brands, with almost 90 percent of the turnover being in India. 

Horlicks products have been an everyday staple in South Asian households for generations. Over the last 15 years, the portfolio and category have grown at a double-digit rate. Despite this, the category still remains under-penetrated in India, the company notes. However, Unilever is well positioned to further develop the market given the extent of its reach and capabilities.

“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 wellbeing of 1 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,” says Nitin Paranjpe, President, Food & Refreshment, Unilever.

The race is over
Nestlé and Unilever were reportedly vying for GlaxoSmithKline Plc’s nutrition business after months of speculation over who would take on the “much-loved” 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 last July, 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.  

By March this year, GSK reached an agreement with Novartis for the buyout of Novartis’ 36.5 percent stake in their Consumer Healthcare Joint Venture for US$13 billion. 

Long-established Horlicks, which is sold through GSK’s Indian subsidiary, has a solid track record. Speaking during a press conference call held earlier this year, GSK CEO Emma Walmsley, stressed that India remains a priority market for GSK, a key location for growth opportunities. Walmsley also described Horlicks as “absolutely extraordinary brand with more than a century of history in India.”

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