GSK’s Indian Horlicks sale may fetch over $4 billion

GlaxoSmithKline (GSK) has accelerated the review of its Horlicks business in India, hoping to sell it for over $4 billion and potentially use the cash for Novartis’ buy out deal.

Bloomberg reported this morning that GSK has sent out an “information memorandum with preliminary details about the business to possible suitors”. The website’s sources name a few bidders such as PepsiCo Inc and Reckitt Benckiser Group Plc.

Reuters sources also list Nestlé, the world’s biggest packaged food company, which hinted at GSK’s interest in Horlicks on several occasions to further increase its sales in India.

The asset in question is GSK’s 72.5% stake in its Indian subsidiary GlaxoSmithKline Consumer Healthcare, famous for the malted drink.

The Indian division also makes the chocolate-flavoured drink Boost endorsed by the cricket legend Sachin Tendulkar, as well as Viva, a beverage containing wheat and barley and chocolate caramel drink Maltova.

Shares of GlaxoSmithKline Consumer Healthcare have advanced 9% in India’s trading this year, giving the company a market value of 299 billion rupees ($4.3 billion).

According to Reuter’s sources, GSK is expecting initial bids in September and is aiming to fetch between $4 billion and current market value.

The UK pharma first announced the “strategic review” of Horlicks and other consumer healthcare nutrition products in March this year.

Proceeds from a potential sale could be therefore used to finance GSK’s buyout of Novartis’ 36.5% stake in the over-the-counter joint venture formed in 2015.

Horlicks is more than 140 years old with origins dating back to 1873, when two British-born men, James and William Horlick, founded a company in Chicago to manufacture the drink.

It was introduced to India by Indian soldiers who fought with the British Army in the First World War.

The pharma giant has already sold the UK arm of its malted drink business in June last year, under similar strategic review, attracting Coca-Cola, Nestlé and Heinz to battling for a deal worth £3 billion ($3.87 billion).

Don't miss your daily pharmaphorum news.
SUBSCRIBE free here.