New Delhi Correspondent
British multinational GlaxoSmithKline Healthcare (GSK) Ltd will sell its 82 per cent stake in its Bangladesh subsidiary and other related brand rights for GSK’s consumer healthcare nutrition activities in certain other countries to Anglo-Dutch company in Unilever, for which the former is expected to receive cash proceeds equivalent to 566 million pounds.
Besides, GlaxoSmithKline Plc’s Indian arm GSK Consumer Healthcare has decided to merge with Unilever’s Indian subsidiary Hindustan Unilever Ltd (HUL) in an acquisition valued at 3.74 billion pounds in India’s largest merger & acquisition deal in the consumer goods segment. The boards of the two companies have agreed for the two separate deals in India and Bangladesh.
Sources said GSK is selling its food and refreshment subsidiaries in Bangladesh and India to help mobilize money for its 13-billion dollar buy-out of leading drug-maker Novartis’ stake in their consumer healthcare joint venture.
GSK Bangladesh is a Dhaka Stock Exchange listed unit and the price of its shares from Taka 1084 per share to Taka 1,378 or four percent on Monday.
The total consideration for the merger & acquisition in India is valued at around 3.1 billion pounds. Popular health drink Horlicks and other nutrition products are sold by GSK Consumer Healthcare in which GSK of the UK holds a 72.5 per cent stake — will now come under the fold of HUL.
After the merger in India, GSK will own approximately 5.7 per cent of HUL. The merger values GSK Consumer Healthcare at Rs 31,700 crore in total following completion of the transaction expected by a year.
“With this proposed strategic merger with GSK Consumer Healthcare India, we will be expanding our portfolio with great brands into a new category catering to the nutritional needs of our consumers. I’m confident that this merger will create significant shareholder value through both revenue growth and cost synergies,” HUL CMD Sanjiv Mehta said in a statement.
Following the merger, the HUL’s food and refreshment business will exceed Rs 10,000 crore and become one of the largest businesses in India and place it ahead of key competitors Britannia and Nestle.
GSK’s consumer nutrition business globally, comprising mainly malt-based beverages, fetched 550 million dollars last year and roughly 80 per cent of the sales came from India. The food and beverage market in India is estimated at Rs 75, crore in size.