Unilever is buying India’s top drink from GlaxoSmithKline Plc. It could give a huge fillip to the FMCG giant’s food ambition in India, which till date has never taken off. Other than its fairly robust tea and coffee business, most of its food bets are either fledgling or have failed.
Unilever is in exclusive talks with GlaxoSmithKline Plc (GSK) to buy its nutrition business, which includes flagship brands such as Horlicks and Boost, reported the Financial Times. If the deal happens, it will be Unilever’s most ambitious acquisition in India after its subsidiary Hindustan Unilever Ltd (HUL)—then known as Hindustan Lever Ltd.
Details of the valuation of GSK nutrition business could not be ascertained immediately, but GSK’s Bombay Stock Exchange-listed business GlaxoSmithKline Consumer Healthcare Ltd., in which it has a 72.5 percent stake, has a market value of $4.2 billion. GlaxoSmithKline Bangladesh Ltd., which is worth 15.7 billion takas ($187 million) would also be included as per Financial Times.
Hindustan Unilever Ltd (HUL), analysts said, “Even as the Indian market for malt-based beverages remained subdued in the last couple of years, Unilever could potentially grow the business multi fold utilizing the vast distribution network of its local unit.”
Getting the GSK’s nutrition business into its fold will give HUL a strong anchor brand, which it could never create on its own, as per the food experts.
Kannan Sitaram, Venture Partner, Fireside Ventures, “Horlicks is an extremely powerful brand and will help HUL’s food business immensely for its next level of growth. HUL till date doesn’t have a strong food brand.”