ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business deals

Unilever enters exclusive talks to buy Horlicks unit from GSK

Anglo-Dutch consumer company beats out rival bid from Nestle for $4bn nutrition business

LONDON (Financial Times) -- GlaxoSmithKline has entered into exclusive negotiations to sell its nutrition business to Unilever, ending a multi-month auction process for the $4bn unit that includes the prized Horlicks malted drink brand popular in India.

The Anglo-Dutch consumer company beat a rival bid from Swiss food and beverage group Nestle, which was looking to build on its market-leading position in powdered hot drinks, where it already sells Milo and Nesquik, people familiar with the sale process said.

Coca-Cola was also shortlisted to join the final round of the auction for the business which began in September but its interest cooled, one person added.

Unilever's offer price could not be determined but GSK's Indian business is listed on the Bombay Stock Exchange, with a market value of $4.2bn. That would mean GSK's 72.5 per cent stake in the business is worth roughly $3bn without a takeover premium. The deal is also expected to include GSK's Bangladesh-listed business.

If the deal is finalised, Unilever would strengthen its position in India, its most important emerging market.

Unilever's recent acquisitions have been aimed at beefing up its home and personal care division, and not as much on food and beverages, but this does not preclude a medium-sized acquisition in food in a key emerging market, wrote Bernstein Research's Andrew Wood in a note published in October.

GSK declined to comment. Unilever could not immediately be reached for comment.

Marketed in Asia as a nutritious boost to children's' diets, the Horlicks product line fits the bill for global consumer goods companies hunting for assets that will satisfy demand for healthy and convenient foods.

With more than 90 per cent of its sales coming from India, analysts said, the asset is a rare chance to acquire a fast-growing product in an emerging market where consumers' diets are changing as per capita income grows. The Indian market is only one-fifth the size of China's despite having a population nearly as big, suggesting great potential.

GSK is selling the business because its priorities have shifted under Emma Walmsley, chief executive. A trigger for GSK's decision to sell was its $13bn acquisition of Novartis's stake in the companies' consumer health joint venture after the Swiss drugmaker decided to exit.

The vast majority of Horlicks sales come through the company's Indian subsidiary, GlaxoSmithKline Consumer Healthcare. Sales of the nutrition products were about £550m in 2017.

GSK sold its Horlicks franchise in the UK last year but the product continues to hold a special place in Indian life, where it is viewed as a nutritional supplement beneficial to children, far removed from its image in the UK as a soporific bedtime drink largely consumed by older people. It has about a 44 per cent share of India's malt-based, nutritional drink market.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media