MUMBAI: A bunch of heavyweights including France’s Danone, Hindustan Unilever and Nestle are competing with US private equity giant KKR & Co to acquire GlaxoSmithKline plc’s 72 per cent stake in its Indian consumer products division, GSK Consumer Healthcare, in a massive $4-billion deal, the biggest in the Indian consumer industry. PepsiCo, Abbott, and Mondelez are the other contenders, for the stake, which has been on block after the UK-based multinational pharma giant started mobilising resources to fund its $13-billion acquisition of Novartis’ consumer products. The initial bids have come and talks are at an early stage, said sources with direct knowledge of the matter. The transaction, perhaps the biggest in Indian consumer history, is expected to gather pace in June when the indicative bids turn into formal non-binding ones and the company shortlists contenders for the second round of negotiations, sources said. As per Monday’s market value, 72 per cent of GSK is worth around Rs 17,980 crore and the deal could include an open offer to minority shareholders of GSK Consumer Healthcare. Danone has hired Lazard as its financial advisor. GSK, which holds some of the best-selling consumer including Boost and Horlicks, has hired two US banks to manage the stake sale process. Mondelez, Nestle, ITC, Abbott, , KKR and Danone declined to comment. Mails sent to Pepsi also remained unanswered. While GSK said it won’t comment on market speculations, the company had said on March 27 that it would assess its Indian consumer healthcare subsidiary as it looks to fund a buyout of Novartis’ stake in their global consumer healthcare joint venture. “The purpose of the review is to assess the strategic options for our wellknown and highly valued nutrition brands, including Horlicks and Boost. These brands are licensed and distributed through , a publicly listed company in India in which GSK owns 72.5 per cent stake. We are conducting this strategic review in support of our transaction to buy out the Novartis stake in our Consumer Healthcare joint venture with Novartis. We expect the outcome of the strategic review to be concluded around the end of 2018. There can be no assurance that the review process will result in any transaction,” it said on March 27. For companies such as Danone, HUL, ITC and Abbott, GSK’s consumer division looks pretty much in line with their product portfolio and could be the best strategic fit. KKR, which rose to global prominence with its $25-billion historic takeover of US food and tobacco giant RJR Nabisco in 1989, is one of the most aggressive private equity investors in India. The New York-based firm, which has raised a record $9.3 billion Asia fund, has been looking for big-ticket strategic assets in India. Analysts expect the sale of Horlicks brand, or sale of Indian products. “We assign a high probability of a global sale of the Horlicks brand, or a slump sale of Malted Food Drink (MFD) brands in India (Horlicks, Boost etc) and allied assets (excluding infrastructure). We believe minority shareholders in India (GSK plc holds 73 per cent in GSK Consumer India) may be appropriately compensated if the parent sells the Horlicks brand globally,” Deutsche Bank said in a note on March 21.
Heavyweights such as KKR, Nestle, PepsiCo and Danone are among the companies rumoured to be in early-stage talks to acquire GlaxoSmithKline's (GSK) 72% stake in its Indian consumer products division. The $4bn deal for a majority slice of GSK Consumer Healthcare in India is thought to be the biggest in the sector in India's history. Formal, non-binding bids are expected to be submitted in 1989, after which a shortlist of contenders will go through a second round of negotiations, according to a source. GSK aims to use the funds raised from the sale to buy out Novartis from a joint venture.