GSK wraps up promised Horlicks sell-off in £3.1B deal with Unilever

After weighing options and offers for its Horlicks drinks brand in India for several months, GlaxoSmithKline signed off on a £3.1 billion sale to Unilever. The cash will help GSK cover the cost of its Novartis consumer buy and plow more money into its newly refocused pipeline.

For the deal, worth about $3.94 billion, the companies will merge GSK Consumer Healthcare Limited with Unilever’s Indian subsidiary. GlaxoSmithKline will own part of the combined company, but plans to sell down that stake in tranches over time. 

From that portion of the deal, GSK expects to pocket an eventual total of £2.4 billion. The company is eyeing another £566 million in upfront cash from Unilever in exchange for an 82% stake in GlaxoSmithKline Bangladesh Limited and other products. The companies expect the transaction to close by the end of the year. All told, the deal is expected to be worth £3.1 billion.

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In a statement, GSK CEO Emma Walmsley said Horlicks has been an important part of the drugmaker’s business for decades, and that “Unilever is well placed to maximize its future potential.” The proceeds will go toward paying down debt and investing in GSK’s pharma pipeline, which Walmsley recently rejigged, partly to refocus on oncology. The company said Monday it would pay $5.1 billion for the cancer-specialized biotech Tesaro, which will bring along the PARP inhibitor Zejula, three pipeline assets and some commercial operations to support Zejula marketing.

GlaxoSmithKline started a review of the Indian consumer business in March when it agreed to purchase Novartis’ stake in the companies’ consumer health joint venture for $13 billion. During the review, potential buyers such as food company Danone, private equity firm KKR, PepsiCo and others showed interest in the Indian brands, according to various reports.  

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Last week, Reuters and the Financial Times reported Unilever had emerged as the lead bidder. Even as GSK offloads certain consumer brands in India, the company plans to stay involved in the Indian market. The company plans to keep investing in OTC drugs and oral health brands in the country; Unilever will distribute those products for five years under the deal.