Some of the world’s biggest consumer companies have submitted non-binding bids for GlaxoSmithKline’s nutrition business as competition intensifies to secure the company’s prized Horlicks malted drink brand ahead of an auction later this year. GSK is expected to produce a shortlist of bidders in the next two weeks, with no single company considered a frontrunner, said people familiar with the situation. Bidders include Nestlé, Unilever and Coca-Cola, as well as a consortium led by KKR, the US buyout group, these people added. Coca-Cola is already bidding to buy Complan, a nutritional drink, from Kraft Heinz. If it were also to acquire Horlicks it could pose potential antitrust issues, some of these people said. PepsiCo is also thought to be following the process closely.
Nestlé, Unilever and KKR declined to comment. Kellogg’s and Reckitt Benckiser decided not to bid, said people informed about the process. Emma Walmsley, GSK’s chief executive, announced in March that the company was launching a strategic review of Horlicks and other consumer healthcare nutrition products “to support the funding” of its $13bn acquisition of Novartis’s stake in the companies’ consumer health joint venture. At that time Ms Walmsley described Horlicks as “a terrific brand with a long history especially in India”. However, given the UK drugmaker’s desire to focus on its over-the-counter and oral health portfolios, “as well as other group capital allocation priorities, it makes sense for us to review it”, she said. The vast majority of Horlicks sales come through the company’s Indian subsidiary, GlaxoSmithKline Consumer Healthcare, in which GSK has a 72.5 per cent holding. Sales of the nutrition products were about £550m in 2017 and the Indian business is publicly traded on the National Stock Exchange and Bombay Stock Exchange, finishing on Tuesday with a market value of $4.4bn. Bids for GSK’s shareholding have been in the $2.5bn to $3bn range, said people informed about the process. Among other products, the subsidiary also manufactures Boost, a chocolate-flavoured, malt-based drink, which is the third-biggest health-food drink in India. Complicating the process of acquiring the nutrition business, it also has sales through a separate public company in Bangladesh, in which GSK also owns a large majority of the shares. GSK sold its Horlicks franchise in the UK last year, but the product continues to hold a special place in Indian life, where it is viewed as a nutritional supplement beneficial to children, far removed from its image in the UK as a soporific bedtime drink largely consumed by older people. It has about a 44 per cent share of India’s malt-based, nutritional drink market. The company has been at pains to emphasise that India remains a priority market for GSK’s consumer healthcare division. Ms Walmsley said in March that it would continue to invest in growth opportunities for its over-the-counter and oral health brands in the country such as Sensodyne and Eno, “and we are actively investing in our pharmaceuticals and vaccines businesses, notably with a new state of the art manufacturing facility in Vemgal, Karnataka”.


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