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Unilever to acquire GSK’s healthcare products

HFD strategy for emerging markets


HFD strategy for emerging markets

Anglo-Dutch group, Unilever, 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.

Unilever’s share of the total consideration is Euro3.3 billion, payable using a combination of cash, and shares in its listed Indian subsidiary, Hindustan Unilever Limited.

Pending regulatory and shareholders clearances, the transaction completion is expected in 12 months.

In 2018, the GSK HFD portfolio delivered total turnover of Euro550 million, primarily through the Horlicks and Boost brands. Almost 90% of the turnover is in India.

The transaction is aligned with Unilever’s stated strategy of increasing its presence in health-food categories and in high-growth emerging markets.

GSK HFD is the undisputed leader in the Health Food Drinks category in India, with iconic brands such as Horlicks and Boost, and a product portfolio supported by strong nutritional claims.

This portfolio has a long history in India with Horlicks having originally been introduced in the 1930s.

Horlicks products have been an everyday staple in South Asian households across generations. Over the last 15 years, the portfolio (and category) has grown at a double-digit rate.

Despite this, the category still remains under-penetrated in India. Unilever is well positioned to further develop the market given the extent of its reach and capabilities.

Nitin Paranjpe, President, Food & Refreshment, Unilever, said: “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 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,” said Paranjpe.

Sanjiv Mehta, Chairman and CEO, Hindustan Unilever said: “With this strategic merger of Hindustan Unilever and GSK Consumer Healthcare India Limited, we will be expanding our portfolio through great brands into a new category catering to the nutritional needs of our consumers. I am confident that this merger will create significant shareholder value through both revenue and cost synergies.

“The turnover of our Foods & Refreshments business will now exceed Rs. 100 billion and we will become one of the largest F&R businesses in the country. We look forward to welcoming new brands and great talent into the Unilever and HUL family, once the transaction is complete.”

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.

Acquisition of 82% stake in GSK Bangladesh:

Unilever will acquire, for cash, 82% of the shares of the publicly listed GSK Bangladesh Limited at an equity value of BDT16 billion(Euro169 millio), implying an EV/EBITDA multiple of c.15x.

Acquisition of certain other commercial operations and assets outside India:

Unilever will also acquire the commercial operations in 20 other predominantly Asian markets and the intellectual property rights for a total consideration of Euro470 million in cash.

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