Nestle, Unilever face off for GSK’s consumer nourishment biz; bids could go up to $3.5 billion

The sale could help GSK fund its $13-billion buyout of the Novartis stake in their consumer healthcare JV

Food and drinks large Nestle will rise against Unilever in the final round of discussions for GlaxoSmithKline’s (GSK) consumer diet business in India, as the 3rd shortlisted contender Coco-Cola has dropped from the competition, according to a written report with the Economic Times.

The bids for GSK’s stake available is going to be between $3.1 billion and $3.5 billion, sources told the newspaper. Whichever company effectively buys the stake must buy yet another 26 percent via an open offer.

Nestle, which already sells malt drink Milo, has it is sights set on GSK’s Horlicks, which can make it the marketplace innovator in the malt drink category. GSK’s Horlicks and Increase dominate the section, with the previous enjoying a value market talk about of 43.3 percent.

Together, both brands account for around 60 percent of the amounts bought from the household malt drink space.

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Nestle is being advised by Credit Suisse for the purchase, while Unilever has been advised by Loan provider of America Merrill Lynch. Morgan Stanley and Greenhill are advising GSK on the sale.

The other contender in the race, Unilever, is concentrating on its food business as the category. The business has witnessed development in this category. The increase in this category may also be attributed to the meals business’ merger with refreshments business in July this year.

Its products such as Brooke Connection, Bru, Lipton and Kwality Wall space together take into account 18 percent of Hindustan Lever’s Rs 35,000 crore annual sales.

Loan company of America Merrill Lynch is assisting Unilever for Horlicks acquisition.

Aside from Nestle and Unilever, some major consumer companies — both from India and around the world — had their eye on the GSK sale.

These businesses included Reckitt Benckiser, General Mills, Kellogg’s, Danone, private equity fund KKR, amongst others.

Deadline for submitting the ultimate binding offer was November 17. However, it’s been extended with a couple of days, the survey suggests.

Earlier this season, GSK had said that it was planning for a partial or full sale of its 72.5 percent stake in Indian subsidiary GSK Consumer Healthcare by the finish of the year. The sale may help finance its $13-billion buyout of the Novartis stake in their consumer health care joint venture.

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