HUL-GSK deal: Unilever picks up iconic Horlicks, Boost brands; 3 key synergies from mega merger

By: | Published: December 3, 2018 3:38 PM

In a major development, FMCG behemoth HUL has announced a mega merger with GSK Consumer, in which the firm will pick up the iconic Horlicks and Boost brands for a whopping EUR 3.3 billion. We take a look at 3 synergies from the deal.

With this mega deal, Hindustan Unilever will add iconic brands Horlicks and Boost to its product portfolio.

In a major development, FMCG behemoth HUL has announced a mega merger with GSK Consumer, in which the firm will pick up the iconic Horlicks and Boost brands for a whopping EUR 3.3 billion. The transaction is an all equity merger with 4.39 shares of HUL being allotted for every share in GSK COnsumer India. This transaction values the total business of GSK Consumer at Rs 31,700 crore. With this mega merger, Unilever will try to tap synergies through supply chain opportunities, and also harness the potential of iconic brands such as Boost and Horlicks, among others. We take a look at three key synergies from the mega deal.

Three key synergies from HUL-GSK mega deal

Horlicks, Boost brands– a staple across generations

With this mega deal, Hindustan Unilever will add iconic brands Horlicks and Boost to its product portfolio. Notably, GSK’s offering has a long history in India with Horlicks having originally been introduced in the 1930s. Horlicks products have been an everyday staple in households across generations. “The acquisition is in line with the Hindustan Unilever strategy to build a sustainable and profitable Foods and Refreshment (F&R) business in India by leveraging the mega trend of health and wellness. GSK CH India is the market leader in the HFD category, with iconic brands such as Horlicks and Boost, and a product portfolio supported by strong nutritional claims,” said the statement.

Operational synergies- supply chain

HUL look to garner major cost synergies from the deal, by harnessing supply chain efficiencies and operational improvisation. “We will drive significant cost synergies from a combination of supply chain efficiencies and operational improvements, go-to-market and distribution network optimisation, scale in a number of cost areas such as marketing and streamlining of overlapping infrastructure. We expect the business to grow in double-digits in the medium-term and margins to be accretive to HUL post realisation of synergy benefits,” said the firm.

Expansion

HUL will look to increase penetration with special focus on rural markets and emerging channels and expand its offerings to the fast-growing premium segment, as per its release. “The average growth rate has been double digit over the last decade, and the category still remains under-penetrated in India. HUL is well positioned to further develop the market given the extent of its reach and capabilities,” said the firm. Post the acquisition, the turnover of the company’s Foods and Refreshment (F&R) business will exceed Rs 10,000 crore. “We will become one of the largest F&R businesses in the country,”  HUL Chairman and Managing Director Sanjiv Mehta said.

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