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Glaxo's Horlicks Sale Bid Heats Up, Nestle, Unilever Close In

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A Financial Times report, citing sources, on Tuesday said that GlaxoSmithKline plc (GSK - Free Report) is in exclusive discussion with Unilever PLC (UL - Free Report) to sell its Horlicks and other nutrition products business to the London-based consumer giant.

These nutrition products are mostly sold by Glaxo’s India-based subsidiary, GlaxoSmithKline Consumer Healthcare. Glaxo owns 72.5% stake in the subsidiary. Reuters reported that the sale of these nutrition brands could fetch Glaxo more than $4 billion.

Another report published in Indian newspaper Times of India on Wednesday stated that Unilever’s Swiss rival Nestlé is close to acquiring Horlicks and other nutrition brands in India in a transaction, which could be worth a little more than $3 billion. Horlicks malted-milk drink is a popular drink in the powdered hot beverages category in India.

Both Nestlé and Unilever are looking to strengthen their position in India, an important growth market for the European consumer giants. It remains to be seen who emerges as the winner.

So far this year, Glaxo’s shares have outperformed the industry, rising 13.9% compared with a 7.0% increase for the industry.

 

 

Glaxo, in March this year, had said it is looking at strategic alternatives for its Horlicks and other nutrition products business. Several food giants, Nestle, PepsiCo and Coca-Cola (KO - Free Report) were being speculated as the frontrunners to bid for the Horlicks business.

In June 2018, Glaxo bought Novartis’ (NVS - Free Report) 36.5% stake in their consumer health care (CHC) joint venture for $13 billion (£9.2 billion).With the acquisition of Novartis’ stake, Glaxo now has 100% ownership of its Consumer Healthcare unit, which includes products such as Sensodyne and Flonase. Reportedly Glaxo put the Horlicks business up for sale to fund the buyout of Novartis’ stake in CHC JV

Glaxo currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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