07 April 2020

HUL – GSK ACQUISITION

A brief about the event:

Hindustan Unilever Ltd has completed the merger of GlaxoSmithKline

Consumer Healthcare with itself after year of its announcement.
However, there has been two changes to the deal : 1) Acquisition of
Horlicks brand for India territory for Rs 3050 Crs; 2) Only the
distribution rights for OTC brands would be with HuL and the
marketing would be with Glaxo.

Key Points in the deal:

• Market Development Opportunity • With Low Overall penetration of ~24%and ~14% in the
for HUL Rural markets and a diverse distribution chain of HUL ,
the company remains confident of double digit growth
in the segment.

• Horlicks will be placed in the Nutrition under Food and

• Horlicks will be placed under Food Refreshment business. This segment contributes ~19%
& Refreshment segment of the revenues to HUL as on Q3FY20.
• The acquisition will provide more flexibility to develop
and grow the nutrition business in India and also
undertake brand extensions.

• Horlicks volume growth expected • The Horlicks has ~50% of the volume share in India.
With the highly diversified distribution chain coupled
with the marketing of GSK, it will help HUL build a
strong profitable nutrition portfolio in India.

• Synergy benefits
• Systematic integration planned
for smooth transition
07 April 2020
• The brand will benefit from the Advertising, Supply
chain, administration and overheads. These will help
to expand the margins by 800-1000 bps.
• Hul would continue to push for more product
innovation and also try to capitalise the distribution
reach.
• At present HUL has 14 CCBT (Country Category Based
Teams) which operates like independent company and
looks after their respective FMCG categories.
• For Horlicks also a separate CCBT team will operate
under the Food & Refreshment division which would
help to unlock the market potential for the brand.
• Also a separate Integration team has been allocated
who would looking after the synergy plans for the next
18 months. IT integration is expected to take more 9
to 12 months and ancillary function to take around 6
more months.