Unilever Looks to Acquire GlaxoSmithKline's Nutrition Business
28 November 2018 - 11:43AM
Dow Jones News
By Ben Dummett, Saabira Chaudhuri and Denise Roland
Unilever PLC is in talks to acquire GlaxoSmithKline PLC's
nutrition business, people familiar with the matter said, a deal
that would hand the consumer-goods giant one of India's best-known
brands.
If finalized, a deal would end a monthslong auction process that
also drew interest from Nestle SA and Coca-Cola Co., who were all
eager to bolster their presence in one of the world's most
promising consumer markets.
The centerpiece of GSK's nutrition business is the Horlicks
brand, a malted-milk drink that is popular in India and mainly sold
through GlaxoSmithKline Consumer Healthcare Ltd., the big
U.K.-based drug maker's majority-owned Indian unit.
Some analysts have suggested Horlicks could be valued at as much
as $3 billion.
The deal could be completed in the coming weeks, one of the
people familiar with the matter said.
The talks were earlier reported by the Financial Times.
Unilever's interest in Horlicks comes as the Anglo-Dutch company
shuffles its portfolio, which includes Ben & Jerry's ice cream,
Dove soap and Lipton tea, to help reinvigorate growth amid tough
competition and changing consumer tastes.
Those moves include a EUR6.83 billion ($7.74 billion) sale of
its slow-growth margarine and spreads business in July, along with
investments in areas such as personal care and organic tea.
Unilever has been particularly active since batting away a $143
billion takeover approach from Kraft Heinz Co. in 2017.
India's huge population and rising middle class have attracted a
string of big bets from Western companies, with IKEA, Amazon.com
and Walmart Inc. all expanding in the country in recent years.
Despite being relatively unknown to Americans, the Horlicks
brand was founded in Chicago in 1873 by brothers William and James
Horlick, who had emigrated to the U.S from England. The pair
initially aimed the drink at infants and invalids, but it gained
popularity with mountaineers and later with soldiers during the two
world wars.
In 1969, Horlicks was bought by Beecham Group, a predecessor
company to GSK. The brand has lost ground in Britain, where it is
viewed as old fashioned, but remains popular in India, where it is
marked as a children's drink to help bone and muscle
development.
Horlicks now makes the vast majority of its sales in India and
is the country's best-selling flavored powdered drink, a category
that has grown 11% a year over the past five years, according to
Bernstein Research. Still, the brand's growth has slowed recently
amid tough competition from both global and local players.
Buying Horlicks would add to Unilever's sizable operations in
India. It currently sells global and some local brands through its
majority owned, publicly traded subsidiary Hindustan Unilever
Ltd.
For GSK, the sale will help fund its $13 billion deal in March
to buy out its partner Novartis AG in their consumer-health joint
venture. That unit focuses on science-based consumer products such
as Sensodyne toothpaste, Crocin painkillers and ENO digestive aids.
GSK announced a review of its nutrition business and its stake in
the Indian business this year.
Write to Ben Dummett at ben.dummett@wsj.com, Saabira Chaudhuri
at saabira.chaudhuri@wsj.com and Denise Roland at
Denise.Roland@wsj.com
(END) Dow Jones Newswires
November 27, 2018 19:28 ET (00:28 GMT)
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