Unilever swoops on Horlicks

Glaxo boss Emma Walmsley closes in on sale of £3bn drinks business

UNILEVER has emerged as the front runner in the race to buy Glaxosmithkline’s Horlicks malt drinks business. The Anglo- Dutch consumer goods firm is understood to have pulled ahead of rivals after a lastminute, all-cash offer.

Glaxo launched the bidding process in September, pitting some of the world’s biggest consumer goods giants against each other.

Horlicks, which is being sold along with other nutrition businesses, is expected to fetch as much as £3bn.

Until yesterday the Swiss giant Nestle was seen as a top contender, but it is believed to have been edged out by Unilever.

Coca-Cola was another bidder but its interest reportedly petered out.

Unilever is now understood to have entered exclusive talks with Glaxo.

It had offered an all- share deal to Glaxo, compared to an all-cash offer from rival Nestle. But when the sale looked like it could go in Nestle’s favour Unilever swooped in with a bigger cash offer, according to CNBC.

If Unilever is successful, the deal would boost its presence in the rapidly growing Indian market where Horlicks is a national favourite.

Glaxo and Unilever last night declined to comment.

Emma Walmsley, the chief executive of pharmaceuticals giant Glaxo, announced in March that she would put Horlicks and other nutrition brands up for sale, saying they no longer fitted in with the rest of the business.

The nutrition brands are held within an Indian-listed division in which the British drug maker has a 72.5pc stake.

That holding was worth around £2.4bn yesterday. A bid from Unilever or any other buyer is expected to add a premium to that figure.

London-listed Glaxo’s shares closed 1.4pc, or 21.8p, higher at 1585.8p, as investors sensed a deal was close.

John Rountree, managing partner of pharmaceuticals consultancy Novasecta, said a sale would boost Glaxo’s war chest for acquisitions as it seeks to boost its drugs pipeline.

Walmsley has made restoring the company to its former glory in pharmaceuticals her priority. She has not ruled out acquisitions to bolster key areas where it is seen to have fallen behind, such as cancer treatments.

But with the 49-year- old also vowing to protect the dividend, Rountree said asset sales were a useful way to release cash.

He added: ‘The sale of Horlicks makes a lot of sense for all the parties. The brand has been sitting in the portfolio for a while and it really doesn’t fit with where Glaxo is going.

‘It had Ribena and Lucozade as well and it sold those. This is a company that does provide, and always has provided, a very good dividend for its shareholders – it amounts to about $5bn [£3.9bn] a year. So if you are investing in innovation you have to stock up the balance sheet to pay for that.’ Horlicks, made from wheat, milk and malted barley and sold in powdered form, is hugely popular in India, where it is given to children before school.

It was invented in 1873 by Victorian businessmen William and James Horlick.

The drink was introduced to India by Indian soldiers who fought alongside the British in the First World War.

Nestle is said to have told Glaxo several times privately that it was interested in buying Horlicks. A spokesman said that it would not comment on speculation.