Unilever may top Nestle in US$3.4b cash bid for GSK nutrition business

INDIA – The British consumer goods giant, Unilever may walk away with the Glaxo SmithKline’s nutrition business with a US$3.4 billion all-cash offer for a 72.5% stake, according to a person with direct knowledge of the matter identified with Financial Times (FT).

GSK has also confirmed that consideration is being given to a potential transaction that includes a merger of GSK Consumer and Health.

With the announcement set to be made soon, the battle for the consumer nutrition business which includes India’s popular malted drink brand, Horlicks and health food drink Boost that started nearly a year ago is ending soon.

Unilever is set to beat Nestle, the world’s largest food and drinks company and the only serious contender remaining in the race for the greatly admired business.

Reports reveal that talks have been completed and a definitive agreement is likely to be signed soon.

The contest has been so hot that it has left industry experts speculating on who will carry away the consumer healthcare business.

Not long ago, Nestle was said to be nearing the deal but Unilever is said to have won out after revising its initial share-swap offer into an all-cash deal.

FT says Unilever’s offer is close to a 9.67% premium to GSK’s share price on the Bombay Stock Exchange which had risen to 1.72% to US$103.36 market value of US$4.3 billion.

The deal which may also involve GSK’s Bangladesh-listed business, will see Unilever help GSK sell its over-the-counter (OTC) and oral care brands such as Sensodyne, Eno and Crocin as part of the transaction.

GSK had in March announced a strategic review of its consumer healthcare nutrition products including the Horlicks brand in order to help fund its US$13-billion buyout of the Novartis stake in their consumer healthcare joint venture.

Other bidders earlier in the process included Coca-Cola which has been looking to expand in emerging markets.

The deal is set to boost Unilever’s position in India, which it has identified as its emerging market.

Paul Polman, chief executive of the company had last year indicated that India could become Unilever’s biggest market in the coming years.

According to a newspaper report, India contributes 9% to Unilever’s total sales of US$5.11 billion.

“I am not giving guidance but the assumption that we double (in India) in the next 10 years or seven-eight years is a no-brainer,” said Polman.

“Because US is not going to double.”

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