Shares of Hindustan Unilever and GlaxoSmithKline Consumer Healthcare rose by 0.76% to 1.31% at 14:30 IST on BSE after Hindustan Unilever's board approved merger of GSK Consumer Healthcare with itself.Meanwhile, the S&P BSE Sensex was down 31.94 points, or 0.09% to 36,162.36.
GlaxoSmithKline Consumer Healthcare was up 1.31% at Rs 7365.
The board of directors of Hindustan Unilever (HUL) today, 3 December 2018, approved a scheme of amalgamation between the company and GlaxoSmithKline Consumer Healthcare (GSK CH India) subject to obtaining requisite approvals from statutory authorities and shareholders. HUL has reached a definite agreement with GSK CH India in this regard. The transaction 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.
Following the issue of new HUL shares, Unilever's holding in HUL will be diluted from 67.2% to 61.9%. The merger includes the totality of operations within GSK CH India, including a consignment selling contract to distribute GSK CH India's over-the-counter and oral health products in India. The transaction is expected to be completed in one year subject to regulatory and shareholder approvals.
The acquisition is in line with the Hindustan Unilever strategy to build a sustainable and profitable foods and refreshment (F&R) business in India by leveraging the mega trend of health and wellness. GSK CH India is the market leader in the health food drinks (HFD) category, with iconic brands such as Horlicks and Boost, and a product portfolio supported by strong nutritional claims. This portfolio has a long history in India with Horlicks having originally been introduced in the 1930s. Horlicks products have been an everyday staple in households across generations.
Sanjiv Mehta, chairman and managing director, HUL said, "With this proposed strategic merger with GSK CH India, we will be expanding our portfolio with great brands into a new category catering to the nutritional needs of our consumers. I am confident that this merger will create significant shareholder value through both revenue growth and cost synergies. The turnover of our F&R business will exceed Rs.100 bn and we will become one of the largest F&R businesses in the country. We look forward to welcoming new brands and great talent into the Unilever and HUL family, once the transaction is complete."
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