Fast-moving consumer goods major Hindustan Unilever announced an all-equity merger of itself with GlaxoSmithKline Consumer Healthcare Limited (GSK CH India), for a transaction worth Rs 31,700 crore in the country’s largest deal within consumer goods market.
The all-equity merger deal includes an exchange ratio of 4.39 HUL shares for each GSK Consumer India share, along with GSK entire operations of nutrition business and contracts to distribute the latter’s over-the-counter (OTC) and oral care brands such as Sensodyne, Eno, and Crocin.
“With this proposed strategic merger with GSKCH India, we will be expanding our portfolio with great brands into a new category catering to the nutritional needs of our consumers,” said HUL chairman Sanjiv Mehta adding that the merger will create significant shareholder value through both revenue growth and cost synergies. “The turnover of our food and refreshment business will exceed Rs10000 crore and we will become one of the largest F&R businesses in the country.”
In March, GlaxoSmithKline Plc chief executive Emma Walmsley announced that the company was exploring a partial or full sale of its stake in Indian subsidiary GSK Consumer Healthcare by the year-end. This move was made by the company since it required funds for its $13-billion buyout of the Novartis stake in their consumer healthcare joint venture.
GSK Consumer India business had a turnover of about Rs4200 crore in the year ended March 2018, primarily through its Horlicks and Boost brands.
Following completion of the transaction, currently expected by the end of 2019, GSK intends to sell down it’s holding in HUL. Such sell down will be in tranches and at such times as GSK considers appropriate, taking into account market conditions.
In addition, GSK is to sell its 82% 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.
