Global giants enter fray for GSK’s $4bn Horlicks unit

GSK had announced a strategic review 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. The initial, non-binding offers were due on Monday.

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Mumbai: Global consumer products behemoths Nestle and Unilever are among suitors who are placing bids to acquire UK pharmaceutical giant GSK’s Indian nutritional foods unit — which owns health food drinks (HFDs) Horlicks and Boost — in a deal estimated at $4 billion.

GSK had announced a strategic review 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. The initial, non-binding offers were due on Monday.

Morgan Stanley and Greenhill are advising GSK on the sale. Nestle’s bid is being advised by Credit Suisse and that of Unilever by Bank of America Merrill Lynch. Nestle and Unilever are said to be vying with other strategic bidders like Reckitt Benckiser, PepsiCo, Mondelez and Kellogg’s. Indian conglomerate ITC decided to pull out after evaluating a bid early on, sources said. This makes the bidding fray a slugfest between global consumer products heavyweights.

A consortium led by private equity buyout investor KKR — which includes GSK Consumer Healthcare’s former India head Zubair Ahmed — is also filing a bid. However, sources said the sale process could favour strategic suitors like Nestle, Unilever and Reckitt Benckiser with financial bidders not finding much favour.

A Nestle India spokesperson said, “We do not wish to comment on speculation.” This was also the view expressed by other companies when contacted by TOI. A GSK spokesperson said the company wouldn’t comment on market speculation. Early this year, the company had said it expects the outcome of the strategic review to be concluded by the end of 2018.

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. Its Women Horlicks became a leading brand in online share of voice. On the other hand, Mother’s Horlicks became the No.1 prescribed pregnancy HFD brand. The brand was extended to biscuits as well.

GSK has maintained that India remains a priority market 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.

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