More big-name suitors are jumping into the mix for GlaxoSmithKline’s Indian consumer health unit. After earlier reports that Danone, Nestle and others were on the verge of a bidding war, Kellogg and Reckitt Benckiser are said to be suiting up for the fight.
The cereal giant and the consumer behemoth are the latest to jump into the fray, according to The Economic Times, which also lists Unilever, Mondelez and Coca-Cola as potential buyers. Both of the new suitors have wrapped up initial evaluations, with Rothschild advising Kellogg, and Goldman Sachs steering RB, sources told the Indian publication.
The addition of Reckitt is no surprise, considering CEO Rakesh Kapoor’s worldwide growth strategy and penchant for M&A. Its last big buy in the Indian market was Paras Pharmaceuticals back in 2010, but more recently, it landed its largest-ever pickup in U.S. baby formula business Mead Johnson.
Reckitt has been looking for more, too. Earlier this year, it chased Pfizer’s consumer health business, only to pull out once it was clear it couldn’t strike a bargain for just one piece of the unit. But GSK’s Indian consumer business, which analysts say could fetch $4 billion, would be much easier to swallow than Pfizer’s entire unit, which the New York drugmaker expected to bring $20 billion.
Kellogg, on the other hand, is more of a surprise to industry watchers after its conservative history in India. But the company is looking to diversify away from cereal—which some markets now perceive as overly sugary and artificial—with more health-focused buys, TET notes. GSK's popular drink brands Horlicks and Boost, which fall under the health umbrella, could help it do just that.
Meanwhile, a little bidding competition would be welcome for GlaxoSmithKline, which is looking to sell off its share in the Indian GlaxoSmithKline Consumer Healthcare Ltd. to help it fund its own consumer buy. It announced that it’d be shopping the stake at the same time it revealed a $13 billion agreement for Novartis’ share of the pair’s consumer joint venture.
The British pharma giant has been clear that it doesn’t intend to back away from India in general, though. The country “remains a priority market for GSK investment and growth,” the drugmaker said in March, adding that it would continue to back OTC and oral health brands and invest in pharmaceuticals and vaccines there, too.