Rs 31,700 crore deal: GSK Consumer Healthcare to merge with HUL

The Indian Express
December 04, 2018

In the country’s largest deal in the consumer goods segment, GlaxoSmithKline plc’s Indian arm GSK Consumer Healthcare has decided to merge with Hindustan Unilever Ltd in an acquisition valued at Rs 31,700 crore.
The boards of the two companies have agreed for a share exchange ratio of 4.39 HUL shares for every one GSK Consumer Healthcare share. The total consideration for the takeover is valued at around 3.1 billion pounds based on the 15-day volume weighted average price (VWAP) ended on November 30, 2018 of HUL shares of Rs 1,717. Net proceeds are estimated to be approximately 2.4 billion pounds.
Horlicks and other nutrition products are sold by GSK Consumer Healthcare — which is listed on the stock exchanges, in which GSK of the UK holds a 72.5 per cent stake — will now come under the fold of HUL. After the merger, GSK will own approximately 5.7 per cent of HUL. The merger values GSK Consumer Healthcare at Rs 31,700 crore in total, or Rs 7,540 per share, a 15.4 per share premium to the un-disturbed share price of Rs 6,531 as at close of business on March 26, 2018. Following completion of the transaction, currently expected by the end of 2019, GSK intends to sell down its holding in HUL. Such sell down will be in tranches and at such times as GSK considers appropriate, taking into account market conditions, GSK said.
In addition, GSK will sell its 82 per cent stake in GlaxoSmithKline Bangladesh Limited and other related brand rights for GSK’s consumer healthcare nutrition activities in certain other territories to Unilever, for which it is expected to receive cash proceeds equivalent to 566 million pounds.
India remains an important market for GSK and the company will continue to invest in growth opportunities for its OTC and oral health brands there, which include Crocin, Eno and Sensodyne,” it said. Following completion of the transaction, HUL will distribute GSK’s OTC and oral health brands, that are currently distributed by GSK Consumer Healthcare. This arrangement will be for a period of 5 years. HUL is the largest FMCG company in the country, with strong distribution reaching over seven million outlets across India.
Emma Walmsley, CEO, GSK, said: “Horlicks has made a significant contribution to GSK and to the health of consumers across India for many decades and we believe Unilever is well placed to maximise its future potential. Proceeds from this transaction will be used to support the Group’s strategic priorities, including investing in our pharmaceutical business.”
“With this proposed strategic merger with GSK Consumer Healthcare India, we will be expanding our portfolio with great brands into a new category catering to the nutritional needs of our consumers. I’m confident that this merger will create significant shareholder value through both revenue growth and cost synergies,” HUL CMD Sanjiv Mehta said in a statement.
“The turnover of our F&R (food and refreshment) business will exceed Rs 10,000 crore 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,” Mehta said. The transaction is conditional on the approval of the merger by the shareholders and creditors of each of GSK Consumer Healthcare and HUL.


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