HUL acquires GSK Consumer Health India for Rs 31700 crore

HUL acquires GSK Consumer Health India for Rs 31700 crore

The global consumer goods group is spending £3.1 billion ($3.9 billion) to buy most of the India consumer healthcare business owned by GlaxoSmithKline (GSK), including hugely popular beverage brands such as Horlicks and Boost.

While Horlicks will be retained by Unilever Plc, Boost, Viva and Maltova - three other brands in GSK's health food drinks category - will remain with the merged entity.

Synergy benefits will start accruing from FY21 Expects one-time dividend in FY21, given that Glaxo has cash of 38 billion rupees ($539 million) on its books and Hindustan Unilever has 80 percent dividend payout Maintains hold, PT 1,880 rupee. Nearly 90% of this is in India. Its product portfolio, with a long history in India, is supported by strong nutritional claims.

Unilever said the move was associated with its strategy of increasing its presence in health-food categories and in high-growth emerging markets.

Nitin Paranjpe, president, food and refreshment, Unilever, said, "We are delighted to be acquiring the GSK Health Food Drinks portfolio". GSK has a large play in India, the Anglo-Dutch consumer product major's second largest market.

According to the deal announced on Monday, HUL has made a decision to undertake distribution of GSK Consumer's over-the-counter (OTC) products, including Iodex, Eno, Crocin, and Sensodyne, for a period of five years.

As per a definite agreement reached by HUL with GSK CH India, 4.39 shares of HUL will be allotted for every share in GSK CH India.

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Unilevers share of the total consideration is €3.3bn payable using a combination of cash, and shares in its listed subsidiary in India, Hindustan Unilever Limited.

The GSK CH India business delivered total turnover of around Rs 4,200 crore in FY18, primarily through its Horlicks and Boost brands.

The deal, announced on Monday, marks a further step by drugmaker GSK to streamline its business and follows a competitive auction in which Unilever saw off rival Nestle, as well as earlier interest from Coca-Cola.

The FMCG giant feels that factors such as a large and young population, rising affluence & disposable incomes, persistent nutritional needs apart from a huge potential for market development given the low penetration in rural areas can be exploited through its massive distribution network. The main asset being sold is GSK's 72.5 percent stake in Indian-listed GlaxoSmithKline Consumer Healthcare.

Post synergies, the implied EV/EBITDA multiple for the transaction would be below 20 times.

HUL is expecting the GSK deal to be completed in one year.

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