In exchange, GSK will get a 5.7% stake in HUL, which is valued at ₹230 billion, and hence, become the second-largest shareholder in the company.
GSK said India remained an important market for it and the company will continue to invest in growth opportunities for its OTC and Oral Health brands there, which include Crocin, Eno and Sensodyne.
As part of the process, it had initiated a strategic review of Horlicks and other brands. The GSK CH India business delivered total turnover of around Rs 4,200 crore in the year ended March 2018 and a large chunk of it, nearly 95 per cent of its, came from Horlicks and Boost brands.
The Transaction is subject to customary regulatory and shareholder approvals, with expected completion in c.12 months.
The transaction includes the all-equity merger of Hindustan Unilever Ltd with the publicly listed GSK Consumer Healthcare India; Unilever's acquisition of an 82% stake in GSK Bangladesh Limited; and acquisition of certain other commercial operations and assets outside India. HUL's top management said it will unlock significant synergies from the merger both from revenue and costs.
Post the acquisition, HUL expects the company's Foods and Refreshment (F&R) business to exceed the turnover of Rs 10,000 crore. "We look forward to welcoming new brands and great talent into the Unilever and HUL family, once the transaction is complete", says Sanjiv Mehta, chairman and managing director, HUL.
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Merger will make HUL's food and refreshment business 1.6x larger and give it a strong nutrition brand which can be leveraged in more categories Raises FY21 earnings estimates by 6.5 percent Maintains neutral, lifts PT to 1,900 rupees from 1,770 rupees. HUL told on Monday that it has approved merger with Glaxosmithkline (GSK), a company manufacturing Horlicks.
Unilever will also be getting its hands on Boost, another of India's most popular malted drinks.
Horlicks has a long history in India - which accounts for nearly 90 percent of the GSK arm's turnover in Asia - having been introduced there in the 1930s.
'Despite this, the category still remains under-penetrated in India, ' it said.
It is estimated that the malt-based drinks category will grow to Rs 119 billion by calendar year 2022, from Rs 77 billion, last year.
Unilever is boosting its presence in India by buying some of the country's top nutritional drinks. We will increase penetration with special focus on rural markets and emerging channels and expand our offerings to the fast-growing premium segment.
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