Unilever Seeks Glaxo Line Popular in India -- WSJ

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Unilever Seeks Glaxo Line Popular in India -- WSJ

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By Ben Dummett, Saabira Chaudhuri and Denise Roland 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 28, 2018).

Unilever PLC is in talks to acquire GlaxoSmithKline PLC's nutrition business, people familiar with the matter said, a deal that would hand the consumer-goods giant one of India's best-known brands.

If finalized, a deal would end a monthslong auction process that also drew interest from Nestle SA and Coca-Cola Co., who were all eager to bolster their presence in one of the world's most promising consumer markets.

The centerpiece of GSK's nutrition business is the Horlicks brand, a malted-milk drink that is popular in India and mainly sold through GlaxoSmithKline Consumer Healthcare Ltd., the big U.K.-based drug maker's majority-owned Indian unit.

Some analysts have suggested Horlicks could be valued at as much as $3 billion.

The deal could be completed in the coming weeks, one of the people familiar with the matter said.

The talks were earlier reported by the Financial Times.

Unilever's interest in Horlicks comes as the Anglo-Dutch company shuffles its portfolio, which includes Ben & Jerry's ice cream, Dove soap and Lipton tea, to help reinvigorate growth amid tough competition and changing consumer tastes.

Those moves include a EUR6.83 billion ($7.74 billion) sale of its slow-growth margarine and spreads business in July, along with investments in areas such as personal care and organic tea. Unilever has been particularly active since batting away a $143 billion takeover approach from Kraft Heinz Co. in 2017.

India's huge population and rising middle class have attracted a string of big bets from Western companies, with IKEA, Amazon.com and Walmart Inc. all expanding in the country in recent years.

Despite being relatively unknown to Americans, the Horlicks brand was founded in Chicago in 1873 by brothers William and James Horlick, who had emigrated to the U.S from England. The pair initially aimed the drink at infants and invalids, but it gained popularity with mountaineers and later with soldiers during the two world wars.

In 1969, Horlicks was bought by Beecham Group, a predecessor company to GSK. The brand has lost ground in Britain, where it is viewed as old fashioned, but remains popular in India, where it is marked as a children's drink to help bone and muscle development.

Horlicks now makes the vast majority of its sales in India and is the country's best-selling flavored powdered drink, a category that has grown 11% a year over the past five years, according to Bernstein Research. Still, the brand's growth has slowed recently amid tough competition from both global and local players.

Buying Horlicks would add to Unilever's sizable operations in India. It currently sells global and some local brands through its majority owned, publicly traded subsidiary Hindustan Unilever Ltd.

For GSK, the sale will help fund its $13 billion deal in March to buy out its partner Novartis AG in their consumer-health joint venture. That unit focuses on science-based consumer products such as Sensodyne toothpaste, Crocin painkillers and ENO digestive aids. GSK announced a review of its nutrition business and its stake in the Indian business this year.

Write to Ben Dummett at ben.dummett@wsj.com, Saabira Chaudhuri at saabira.chaudhuri@wsj.com and Denise Roland at Denise.Roland@wsj.com


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November 28, 2018 02:47 ET (07:47 GMT)

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