GSK Consumer Healthcare to merge with Hindustan Unilever: Here are 10 things you should know

In one of the biggest deals across the consumer goods space, Hindustan Unilever Limited (HUL) on Monday said it will buy GlaxoSmithKline's India business, including the popular Horlicks, Boost and other brands, for around $3.8 billion. With this proposed strategic merger with GSK Consumer Healthcare India (GSK CH), HUL plans to expand its portfolio with great brands into a new category catering to the nutritional needs of our consumers.

Here are 10 things you should know about the deal:

1. HUL is the number one FMCG business in the country with a demonstrated track record of delivering growth. Business has delivered growth of 10 per cent CAGR in the last 10 years with EBIT improvement of 530 bps. The company has total assets of Rs 17,677 crore and net worth of Rs 7,004 crore as on September 30, 2018.
2. The transaction, which is expected to be completed in one year, subject to regulatory and shareholder approvals, is an all equity merger with 4.39 shares of HUL being allotted for every share in GSK CH India. This transaction values the total business at Rs 31,700 crore.
3. GSK CH India is the market leader in the HFD category, with brands such as Horlicks and Boost. Listed on BSE, the company has total assets of Rs 5,583.47 crore and net worth of Rs 3,591 crore as on September 30, 2018.
4. The merger of GSK CH India with HUL will be on a basis of an exchange ratio of 4.39 HUL shares for each GSK CH India Share, implying a total equity value of Rs 31,700 crore for 100 per cent of GSK CH India.
5.  Following the issue of new HUL shares, Unilever's holding in HUL will be diluted from 67.2 per cent to 61.9 per cent.
6.  Originally introduced in the 1930s, Horlicks products have a long history in India. A leader in the malt-based beverages segment, Horlicks holds 43 per cent market share followed by Mondelez International's Bournvita, which has around 13 per cent share.
7. The merger includes the totality of operations within GSK CH India, including a consignment selling contract to distribute GSKCH India's Over-the-Counter and Oral Health products in India.
8.  The GSK CH India business delivered total turnover of around Rs 4,200 crore in FY18, primarily through its Horlicks and Boost brands.
9.  The proposed merger is in line with the strategy to build a sustainable and profitable F&R business in India, GSK CH said in a statement. The parties expect significant synergies through supply chain opportunities and operational improvements, go-to-market and distribution network optimisation, scale efficiencies in areas such as marketing, and optimisation of overlapping infrastructure.
10.  Post the acquisition, HUL expects the company's Foods and Refreshment (F&R) business to exceed the turnover of Rs 10,000 crore.

Following the announcement of the closure of the deal, shares of HUL jumped 4.12 per cent to close at 1825.90 apiece.  GSK Consumer Healthcare shares closed 3.75 per cent higher at Rs 7,542.85 on the Bombay Stock Exchange.

Edited by Chitranjan Kumar