GSK, Horlicks to sell 5.69% stake in HUL via block deals worth $3.2-3.4 billion

British drugmaker GlaxoSmithKline Pte and Horlicks Limited plan to sell 5.69 percent stake in Hindustan Unilever (HUL) via block deals at a price band Rs 1,850 - 1,950 per share.

GSK is expected to sell the stake on May 7, 2020 and expected settlement date for the transaction will be May 11.

The deal will be valued roughly between Rs 247.5 million to Rs 260.9 million ($3.2-3.4 billion).

Around 13,37,72,044 shares totalling 5.69 percent of total shares outstanding as of April 21, 2020, will be offloaded through block deals.

The price band is at a discount of 3-8 percent to the closing price of the HUL stock of Rs  2,010.2 per share on May 6 on the National Stock Exchange (NSE).

Morgan Stanley, HSBC, JPMorgan will be the advisors to the deal.

As per the scheme of amalgamation amongst GSK Consumer Healthcare and HUL, GlaxoSmithKline Pte and Horlicks Limited had received 5,40,83,698 shares of Hindustan Unilever  (representing 2.3 percent of total paid-up equity) and 7,96,88,346 shares (3.39 percent stake) respectively in April.

Accordingly, parent company Unilever Plc and group companies' stake in Hindustan Unilever reduced to 61.90 percent, from 67.19 percent earlier after the issue of new shares.

The merger of GSK Consumer with HUL had taken place on the basis of an exchange ratio of 4.39 HUL shares for each GSK Consumer share.

On April 1 this year, HUL completed the merger of GSK Consumer Healthcare with itself, and acquired Horlicks brand for India from GSK for 375.6 million euro (Rs 3,045 crore). Other brands which were under the ownership of GSK Consumer like Boost, Maltova and Viva came to HUL's brand portfolio by virtue of the merger.

In December 2018, Unilever had struck a deal to buy GSK's Horlicks nutrition business, boosting the Anglo-Dutch group's position in India.

GSK Consumer Healthcare's business had delivered total turnover of around Rs 4,500 crore in year ended March 2019, primarily through its Horlicks and Boost brands.

Meanwhile, HUL reported a 1.2 percent year-on-year decline in Q4FY20 standalone profit at Rs 1,519 crore due to lockdown in the second half of March, while revenue during the quarter degrew by 9.4 percent YoY to Rs 9,011 crore with a 7 percent decline in underlying volume growth.