Unilever to Buy Horlicks, One of India's Biggest Brands, From GSK -- Update
03 Dicembre 2018 - 12:13PM
Dow Jones News
By Saabira Chaudhuri
Unilever PLC has agreed to buy malted-milk drink brand Horlicks
from GlaxoSmithKline PLC as part of a $3.75 billion deal that gives
the Anglo-Dutch giant exposure to India's fast-growing
nutritional-drinks market.
The acquisition of GSK Consumer Healthcare India will be
Unilever's largest since 2011 when it agreed to buy shampoo maker
Alberto Culver for roughly the same price. It marks a diversion
from the company's strategy under outgoing Chief Executive Paul
Polman to pursue smaller deals.
Announcing the acquisition Monday, Unilever's food and
refreshments head Nitin Paranjpe said the deal was a rare
opportunity to buy a brand with a leading position in a
fast-growing market.
India's huge population and rising middle class have attracted a
string of big bets from Western companies, with IKEA, Amazon.com
Inc. and Walmart Inc. all expanding in the country in recent years.
Unilever -- whose portfolio of brands includes Ben & Jerry's
ice cream, Dove soap and Lipton tea -- has operated in India
through a subsidiary since the 1930s. The country is one of the
company's biggest markets and its local subsidiary -- Hindustan
Unilever -- is India's biggest consumer goods company.
While relatively unknown to Americans, Horlicks is huge in
India, where it is marketed as a children's drink to help bone and
muscle development. It is India's best-selling flavored powdered
drink.
Mr. Paranjpe described Horlicks as "an everyday staple in South
Asian households across generations" saying the category had grown
at a double-digit percentage over the past 15 years. Despite this,
he said, Unilever's sprawling distribution in India would allow it
to further grow the brand.
Horlicks and the other brands included in the deal -- such as
Boost -- generated revenue of about EUR550 million for 2018, with
90% made in India.
The deal attracted interest from a host of big consumer giants
with Nestlé SA and Unilever emerging as the final two bidders,
according to a person familiar with the matter. Unilever was able
to outbid Nestlé by paying with stock from its Indian subsidiary,
according to a person familiar with the matter.
Under the deal, Hindustan Unilever is buying GSK's
consumer-health business in India in stock. The transaction will
dilute Unilever's holding in its India unit to 61.9% from 67.2%.
Unilever is also buying 82% of the shares of GSK Bangladesh Ltd. in
cash, as well as certain commercial operations and assets outside
India.
Unilever has agreed to distribute in India GSK brands it isn't
buying, including Eno digestive aids, Sensodyne toothpaste and
Crocin painkillers, for five years.
The deal represents Unilever's last move to shuffle its
portfolio amid tough competition and changing consumer tastes.
Those efforts include the sale of its slow-growth margarine and
spreads business, as well as investments in areas such as
direct-to-consumer razors and organic tea.
Last week, the company named Alan Jope, a Unilever lifer who
currently heads its beauty and personal-care division, as its next
chief executive.
Analysts expect the new CEO, who starts Jan. 1, to broadly
follow Unilever's recent shift toward higher-margin personal-care
products and away from slower-growth food.
For GSK, the sale will help fund its $13 billion deal in March
to buy out its partner Novartis AG in their consumer-health joint
venture. GSK announced a review of its nutrition business and its
stake in the Indian business this year.
--Ben Dummett contributed to this article
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
December 03, 2018 05:58 ET (10:58 GMT)
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