Unilever, Kraft Heinz and Nestle are expected to place bids for Horlicks, the health nutrition business of GlaxoSmithKline. The GSK unit could fetch as much as $4 billion per sources who spoke with Reuters. Proceeds from the sale could be used by GSK to pay Novartis for the stake the former acquired in their jointly owned consumer healthcare business.
A statement from GSK indicated that a strategic review of the health nutrition business would be undertaken. In 2017 GSK disclosed that it harbored plans of selling the Horlicks unit in the United Kingdom. The statement from GSK indicated that the strategic review will be concluded before the close of this year though there would be no guarantees that it would result in a transaction.
Following the deal GSK made with Novartis the chief executive officer of GlaxoSmithKline, Emma Walmsley, indicated that it was in the best interests of the company as well as the shareholders.
“The proposed transaction addresses one of our key capital allocation priorities and will allow GSK shareholders to capture the full value of one of the world’s leading consumer healthcare businesses,” saidWalmsley.
Novartis on the other hand said that the deal would allow the pharmaceutical firm to concentrate on growing and developing the core businesses. According to the chief executive officer of Novartis, Vas Narasimhan, the joint venture was performing well and it was the right time to dispose of a non-core asset when its valuation was still attractive.
Currently Horlicks enjoys the biggest sales in India and the brand is the leader in the subcontinent’s health food category as it enjoys a 65% market share in terms of volume and 56.3% market share with regards to value. Some of the competitors of Horlicks in India include Nestle with its Milo brand, Kraft-Heinz with its Complan brand and Mondelez with its Bournvita brand.
Unilever, the largest tea firm in the world, and Nestle, the biggest packaged foods firm in the world, could acquire Horlicks from GSK via their Indian subsidiaries namely Hindustan Unilever and Nestle India. Other suitors who might be interested in Horlicks include Mondelez International, Suntory, Pepsico and Coca-Cola. Another likely suitor is coffee business firm JAB, which only recently agreed to acquire Dr Pepper Snapple. Among the suitors Nestle is already said to have previously declared interest in the GSK unit.
Besides India and the United Kingdom GSK’s consumer health nutrition unit also operates on a smaller scale in Bangladesh and Nigeria.