The deal would bring the brand of Horlicks, a malted-milk, in Hindustan Unilever's portfolio.
The company said: "We will drive significant cost synergies from a combination of supply chain efficiencies and operational improvements, go-to-market and distribution network optimisation, scale in a number of cost areas such as marketing and streamlining of overlapping infrastructure."
Commenting on the merger, Sanjiv Mehta, Chairman and Managing Director, Hindustan Unilever said: "The turnover of our F&R (food and refreshment) business will exceed Rs 100 billion (10,000 crore ) and we will become one of the largest F&R businesses in the country."
Following the issue of new Hindustan Unilever shares, Unilever's holding in the company will be diluted from 67.2 per cent to 61.9 per cent.
The merger includes the totality of operations within GSK Consumer Healthcare 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 announcement of the merger lifted the stock price of both the companies. Shares of Hindustan Unilever closed at Rs 1,825.90 apiece, up Rs 72.30 or 4.12 per cent from the previous close.
Similarly, shares of GSK Consumer Healthcare settled 3.75 per cent or Rs 272.90 higher at Rs 7,542.85 per share.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)