Nestlé, Unilever and Coca-Cola fight it out over GSK’s €3.4bn Horlicks unit

By Nathan Gray contact

- Last updated on GMT

Getty Images / designer491
Getty Images / designer491
FMCG giants Unilever, Coca-Cola and Nestlé are set to compete for GlaxoSmithKline’s nutrition business unit ahead of an auction later this year, reports say.

The bidding war erupted this week after GSK recently put its nutritionals business for sale to help fund a €13 billion buy-out of its joint-venture with Novartis​.

Reports from the Financial Times and Reuters suggest that four bids have already been made, with a $4bn USD (€3.4bn) deal expected to be wrapped up before the end of the year.

Private equity firm KKR are said to be the fourth firm in the running currently - alongside consumer goods multinationals Nestlé, Unilever and Coca-Cola.

Both Kellogg’s and Reckitt Benckiser – previously linked to a big for the unit​ – are said to have not bid at this stage.

Experts familiar with the matter suggested that the GSK business unit – which contains globally recognised malted drinks brand Horlicks - is attractive to major FMCG firms thanks to its significant footprint and strong performances in fast-growing and emerging markets.

Indeed, the vast majority of sales for the Horlicks brand come from India – where the drink is a national favourite.

Coke moving away from soda

‘‘India loves Horlicks, particularly as a breakfast drink for children and gaining access to this market would be a big win for Coca-Cola,” ​noted Ronan Stafford, Lead Analyst at GlobalData Consumer. “India is a young country, with a growing economy, and targeting the hot drink market provides diversity to Coca-Cola’s growth strategy.”

“Hot drinks is a consumption occasion the group hasn’t invested in heavily in the past – but the Costa Coffee acquisition shows that this is about to change,” ​he noted – citing the very recent St

Stafford suggested that the acquisition of Horlicks would help Coca-Cola diversify its brand portfolio ‘at a time when it needs to invest in healthier brands.’

“Malt drinks might be niche, but they have strong health credentials with Horlicks containing vitamins, minerals and fibre,”​ he said. ‘‘Consumers are moving further away from sugary drinks and the sales of carbonates, Coca-Cola’s most well-known interest, are under pressure.”

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