GlaxoSmithKline Consumer Healthcare Limited merges with Hindustan Unilever Limited, marking a new milestone in nutrition story in India

On 2 April 2020, Hindustan Unilever Limited (HUL), India's largest fast-moving consumer goods firm, announced that the merger of GlaxoSmithKline Consumer Healthcare Limited (GSKCH) with HUL has been successfully completed. The merger was announced on 3 December 2018 and was subject to the requisite approvals being obtained which have now been received. This is one of the biggest deals in the FMCG sector in recent times and will create tremendous value for all stakeholders.

Furthermore, HUL's Board of Directors approved the acquisition by GSK for the Horlicks Brand for India for a consideration of Euro 375,6 mln (INR 3045 Cr), exercising the option available in the original agreement made between Unilever and GSK from 2nd April 2020. This will allow HUL to use cash on its balance sheet as well as generate value for shareholders. It will also allow HUL to fuel better salience in a local context. The other brands owned by GSKCH such as Boost, Maltova and Viva join the brand portfolio of HUL through the merger.

The company of GlaxoSmithKline Consumer Healthcare Limited delivered a cumulative revenue of about INR 45 billion over the year ended March 2019, mainly through its brands Horlicks and Boost. The merger of GlaxoSmithKline Consumer Healthcare Limited with HUL for each share of GlaxoSmithKline Consumer Healthcare Limited has been based on an exchange ratio of 4.39 HUL shares. Unilever's holding in HUL will be diluted from 67.2% to 61.9% following the issue of new HUL shares.

The merger is consistent with HUL's strategy of building a sustainable and profitable Food and Refreshment (F&R) business in India by leveraging the health and wellness megatrend. GlaxoSmithKline Consumer Healthcare Limited is the undisputed pioneer in the HFD sector, with popular brands like Horlicks and Boost, and a range of products assisted by credible nutritional statements. Horlicks, with a volume share of nearly 50%, was launched in India in the 1930s, and has become a staple of daily eating in households over centuries. This merger would enhance the focus of HUL on building a successful and sustainable Indian nutrition company.

In India, the segment of nutrition and health drinks remains underpenetrated and HUL is well placed to further grow the market, given the extent of its scope and capabilities. As previously reported, HUL will partner with GSK (via a consignment sale arrangement) to distribute GSK Consumer Healthcare family brands in India. This partnership, with world-class GSK brands (such as Eno, Crocin, Sensodyne, etc.) and the distribution potential of HUL, will unlock value for GSK and further develop go - to-market capabilities for Hindustan Unilever.