The merger of GlaxoSmithKline Consumer Healthcare Limited (GSKCH) with Hindustan Unilever Limited (HUL), which was announced in December 2018, has been successfully completed after obtaining all the necessary approvals.
In addition, the board of directors of HUL has approved the acquisition of the Horlicks brand for India from GSK for ₹3,045 crore by exercising the option available in the original agreement made between Unilever and GSK.
The other brands, which were under the ownership of GSKCH, like Boost, Maltova and Viva have also come under HUL’s brand portfolio by virtue of the merger, stated a release by HUL.
Incidentally, the acquisition of the Horlicks brand by the India unit of Unilever would result in savings for the Indian arm by avoiding expenses like royalty and brand royalty, said HUL chief financial officer Srinivas Phathak, in a media conference call.
He further added that owning a brand brings tax benefits as well including the option of claiming depreciation.
“This (acquiring Horlicks) will enable HUL to utilise cash on its balance sheet and create value for shareholders. In addition, it will enable HUL to drive better salience in a local context,” added the release.
Horlicks, with a volume share of close to 50%, was introduced in India in the 1930s.
Meanwhile, HUL will be partnering with GSK through a consignment-selling arrangement to distribute brands of the GSK Consumer Healthcare family in India.
“This partnership, with world class brands from GSK (like Eno, Crocin, Sensodyne etc.) and HUL’s distribution strength can unlock value for GSK and build further Hindustan Unilever’s go-to-market capabilities,” stated the release.
