Global giants enter fray for GSK’s USD 4 billion Horlicks unit

GSK had proclaimed a tactical evaluation of its nutritional businesses in March this year, which could lead to a sale of its 72.5% stake in GSK Consumer Healthcare in India and parallel operations in Bangladesh and a few other developing markets.

India: Global consumer products giants Nestle and Unilever are among suitors who are placing bids to acquire UK pharmaceutical giants GSK’s Indian nutritional foods unit which holds health food drinks (HFDs) Horlicks and projected a deal of around USD 4 billion. This acquisition will have a positive impact in the near future on consumer goods sector.

GSK had proclaimed a tactical evaluation of its nutritional businesses in March this year, which could lead to a sale of its 72.5% stake in GSK Consumer Healthcare in India and similar operations in Bangladesh and a few other developing markets. Morgan Stanley and Greenhill are guiding GSK on the sale. Nestlé’s bid is being guided by Credit Suisse and that of Unilever by Bank of America Merrill Lynch. Nestle and Unilever are said to be competing with other strategic bidders like Reckitt Benckiser, PepsiCo, Mondelez and Kellogg’s. This makes the bidding fight a slugfest between global consumer products leaders. However, the sale procedure could favour tactical suitors like Nestle, Unilever and Reckitt Benckiser.

According to the industry analysis of BlueWeave Consulting, GSK has a leadership position in the HFD category, with a market share of around 44%. Horlicks had a significant franchise among children and women. Women Horlicks became a leading brand in online share of voice. Mother’s Horlicks became the No.1 prescribed pregnancy HFD brand. The brand was extended to biscuits as well. GSK has always maintained Indian market on a priority basis and the consumer healthcare business will continue to invest in growth opportunities for its over-the-counter (OTC) and oral health brands, such as Sensodyne and Eno. Besides, the group is investing in its pharmaceutical and vaccine businesses. GSK has sent out an information memorandum with introductory details about the business to potential suitors. The sale has attracted interest from potential bidders including Nestle, PepsiCo and Reckitt Benckiser Group. This acquisition will have a significant impact on the consumer health drink industry and will expand phenomenally in the years to come.

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