After completion of the merger between GlaxoSmithKline Consumer Healthcare and Hindustan Unilever Ltd (HUL), British drugmaker GlaxoSmithKline plc is reportedly planning to sale its $3.7 billion (Rs 28,000 crore) stake in the Indian FMCG major.
GlaxoSmithKline (GSK) plc, which owns 5.7 per cent stake in Hindustan Unilever Ltd (HUL), is planning to sell its shareholding through a series of block trades, according to Bloomberg News. If the deal is executed successfully, this could be the largest block trade in India.
On April 1, 2020, HUL completed merger of GlaxoSmithKline Consumer Healthcare (GSK CH) India, the health foods portfolio of GSK, with itself after receiving all the necessary regulatory approvals. The merger of GSK CH India with HUL was done on the basis of an exchange ratio of 4.39 HUL shares for each GSK CH India share, implying a total equity value of Rs 31,700 crore for 100 per cent of GSK CH India.
Post the merger, GSK plc became the second-largest shareholder in the merged entity with 5.7 per cent stake while Anglo-Dutch Unilever's stake in HUL declined to 61.9 per cent from 67.2 per cent earlier.
In December 2018, FMCG giant Unilever had announced the acquisition of health food portfolio from GSK CH India, including popular brands Horlicks and Boost, for $3.8 billion, to boost its food and refreshment business in India.
HUL has proposed to acquire the popular health drink brand Horlicks from GSK for a consideration of EUR 375.6 million (Rs 3,045 crore), exercising the option available in the original agreement between its parent firm Unilever and GSK plc. With this, popular milk supplement brands Horlicks, Boost and Maltova will come under HUL, the maker of Dove, Pears and Lipton brands. This deal will allow HUL to utilise cash on its balance sheet and create value creation for all stakeholders.
The deal would also unlock opportunity for HUL in Health Food Drinks (HFD) market as GSK CH was the market leader in the segment.
Originally introduced in the 1930s, Horlicks products have a long history in India. A leader in the malt-based beverages segment, Horlicks holds 43 per cent market share, followed by Mondelez International's Bournvita, which has around 13 per cent share.
By Chitranjan Kumar