Unilever acquires GSK's Horlicks, aims to increase presence in emerging markets

Unilever has acquired the health food drinks portfolio of GlaxoSmithKline (GSK) in India, Bangladesh and 20 other Asian markets. This includes brands such as Horlicks and Boost, and is in line with Unilever's strategy of increasing its presence in health-food categories and in high-growth emerging markets.

The transaction will result in an acquisition of 82% stake in GSK Bangladesh and acquisition of other commercial operations and assets outside India.

According to the agreement, the transaction consists of three elements such as an all-equity merger of Hindustan Unilever with the publicly listed GSK Consumer Healthcare India (GSK CH India). The merger includes the totality of operations within GSK CH India, as well as a consignment selling contract to distribute GSK’s Over-the-Counter and Oral Health products in India.

Unilever’s share of the total consideration is €3.3bn payable using a combination of cash, and shares in its listed subsidiary in India, Hindustan Unilever. Meanwhile, the GSK HFD portfolio delivered total turnover of €550m, primarily through the Horlicks and Boost brands, almost 90% of the turnover came from India. Over the last 15 years, the portfolio was said to have grown at a double-digit rate, yet the category still remains under-penetrated in India. Unilever aims to further develop the market given the extent of its reach and capabilities.

Marketing has reached out to Unilever for additional information.

GSK first announced a strategic review of Horlicks and other products earlier this year in March, to fund its stake in consumer healthcare joint venture. Among the companies eyeing for the Horlicks brand was Coca-Cola, planning to bid for an estimated US$3.9billion, Sunday Telegraph reported.

Nitin Paranjpe, president, food & refreshment, Unilever, said that the acquisition of the Health Food Drinks portfolio is "transformative" for its food and refreshment business allowing the company to enter the Health Foods Drinks category, while further strengthening its 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," he added.

Sanjiv Mehta, chairman and CEO, Hindustan Unilever said that with this merger of Hindustan Unilever and GSK Consumer Healthcare India, the team in Unilever will be expanding its portfolio through brands into a new category catering to the nutritional needs of its 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. 100bn 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 Hindustan Unilever family, once the transaction is complete," he added.