The Board of Directors of Hindustan Unilever (HUL) has approved a scheme of amalgamation between the company and GlaxoSmithKline Consumer Healthcare (GSK CH India) subject to obtaining requisite approvals from statutory authorities and shareholders. HUL has reached a definite agreement with GSK CH India in this regard. The transaction is an all equity merger with 4.39 shares of HUL being allotted for every share in GSK CH India. This transaction values the total business at Rs 317 bn.
The merger of GSK CH India with HUL will be on a basis of an exchange ratio of 4.39 HUL shares for each GSK CH India Share, implying a total equity value of INR 317 bn for 100 per cent of GSK CH India. Following the issue of new HUL shares, Unilever's holding in HUL will be diluted from 67.2 per cent to 61.9 per cent.
The merger includes the totality of operations within GSK CH India, including a consignment selling contract to distribute GSK CH India's over-the-counter and oral health products in India. The transaction is expected to be completed in one year subject to regulatory and shareholder approvals.
"With this proposed strategic merger with GSK CH India, we will be expanding our portfolio with great brands into a new category catering to the nutritional needs of our consumers. I am confident that this merger will create significant shareholder value through both revenue growth and cost synergies. The turnover of our F&R business will exceed Rs 100 bn and we will become one of the largest F&R businesses in the country. We look forward to welcoming new brands and great talent into the Unilever and HUL family, once the transaction is complete," says Sanjiv Mehta, chairman and managing director, HUL.
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The acquisition is in line with the HUL's strategy to build a sustainable and profitable Foods and Refreshment (F&R) business in India by leveraging the mega trend of health and wellness.
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