In one of the biggest deal across the consumer goods space, FMCG major Hindustan Unilever Ltd (HUL) on Wednesday completed merger with GlaxoSmithKline Consumer Healthcare (GSKCH).
In an exchange filing, HUL said it has received all the necessary regulatory approvals for the merger of GSKCH into the company. The merger of GSK CH India with HUL will be on a 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.
"In addition, the board of HUL also approved acquiring the popular health drink brand Horlicks for India from GSK for a consideration of Euro 375.6 million (Rs 3,045 crore), exercising the option available in the original agreement between its parent firm Unilever and GSK," HUL said in the regulatory filing.
With this, popular milk supplement brands Horlicks, Boost and Maltova will now come under HUL, the maker of Dove, Pears and Lipton brands. This deal will also allow HUL to utilise cash on its balance sheet and create value creation for all stakeholders, the company said.
"This will enable HUL to utilise cash on its balance sheet and create value for shareholders. In addition, it will enable HUL to drive better salience in a local context. The other brands which were under the ownership of GSKCH like Boost, Maltova and Viva come to HUL's brand portfolio by virtue of the merger," the statement said.
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.
The company said that the merger is in line with HUL's strategy to build a sustainable and profitable food and refreshment business in India by leveraging the megatrend of health and wellness. The deal would also unlock opportunity for HUL in Health Food Drinks (HFD) market as GSKCH was the market leader in the segment.
On December 3, 2018, FMCG giant Unilever announced the acquisition of health food portfolio, including popular brands Horlicks and Boost, from GSKCH India and over 20 other markets.