FMCG major Hindustan Unilever (HUL) on Wednesday (1 April) announced completion of GlaxoSmithKline Consumer Healthcare's merger (GSKCH) with itself.
The merger was announced on 3 December 2018 and was subject to obtaining necessary approvals, which have now been secured. Every shareholder of GSK Consumer Healthcare India will get 4.39 shares of HUL.GSK Plc (including Group Companies) will own 5.7% of merged entity. Unilever shareholding in merged entity will be 61.9% vs. 67.2% prior to the merger.
"This is one of the largest deals in the FMCG sector in recent times and will lead to significant value creation for all stakeholders," HUL said.
In addition, the board of directors of HUL approved HUL acquiring the Horlicks Brand for India from GSK for a consideration of Euro 375.60 million (Rs 3045 crore), exercising the option available in the original agreement made between Unilever and GSK.
This will enable HUL to utilize cash on its balance sheet and create value for shareholders. In addition, it will enable HUL to drive better salience in a local context. The other brands which were under the ownership of GlaxoSmithKline Consumer Healthcare (GSKCH) like Boost, Maltova and Viva come to HUL's brand portfolio by virtue of the merger.
The nutrition and health drinks category remains under-penetrated in India and HUL is well positioned to further develop the market given the extent of its reach and capabilities. As shared earlier, HUL will be partnering with GSK (via a consignment setling arrangement) to distribute brands of the GSK Consumer Healthcare family in India. This partnership with world class brands from GSK (like Eno, Crocin, Sensodyne etc.) and HUL's distributn strength can unlock value for GSK and build further HUL's go-to-market capabilities.
Shares of HUL closed 5.17% lower at Rs 2179.25, snapping its two day winning streak. The stock had gained 7.38% in two trading sessions.
Shares of GSK Consumer Healthcare fell 4.63% to Rs 9530.55.
HUL is engaged in fast-moving consumer goods business comprising home, beauty and personal care, foods and refreshment.
GlaxoSmithKline Consumer Healthcare offers malt-based food, protein rich food, cereal-based beverage and nutritional food powder. Its products include nutritional products and over the counter (OTC) products.
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