Unilever leads race to acquire Horlicks’ India business

Anglo-Dutch consumer goods company Unilever has emerged as the leading bidder in a tight contest for GlaxoSmithKline’s Horlicks nutrition business in India, according sources.

If it is able to clinch the deal, Unilever will trump European consumer giant Nestle, which according to a media report on Wednesday was close to buying Horlicks and other GSK consumer healthcare assets in India.

Unilever and GSK, which owns 72.5 per cent of Indian business GlaxoSmithKline Consumer Healthcare, were in exclusive talks, the Financial Times reported on Tuesday, citing people familiar with the sales process.

The acquisition will strengthen Unilever’s position in India, an emerging market whose growing population and rising wealth make it attractive in the long term for companies trying to offset weak growth in Western markets. GSK’s assets, which include the popular maltbased drinks Horlicks and Boost, is likely to fetch less than $4 billion, said people close the deal, who declined to be identified as the information is confidential.

Earlier in the sale process, separate sources had said the assets could be valued at more than $4 billion. Some analysts considered the $4 billion valuation high considering the Indian market for so-called health drinks - mostly dietary supplements or flavour enhancers typically drunk with milk - is seeing a slowdown in growth.

Urban Indian consumers are increasingly turning to healthier, less-sugary alternatives and natural products, analysts and industry sources said.

Last month, Kraft Heinz agreed to sell its popular health-drink brands Complan and Glucon-D, along with some other brands and factories, to Indian pharmaceuticals and consumer company Zydus Wellness for Rs 4,595 crore.

Still, Horlicks comfortably dominates the healthdrinks market in India and a big consumer company with deep pockets is likely to give it a fresh lease of life, analysts and industry sources said. GSK is conducting a strategic review of its nutrition brands in India and expects to conclude the process by the end of 2018, a spokeswoman for GSK India said.

A spokeswoman for Hindustan Unilever, Unilever’s Indian subsidiary, declined to comment. A spokesman for Nestle India said the company would not comment on “speculation”.