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New Delhi: Consumer goods company Unilever Plc’s – that made three separate offers for GlaxoSmithKline’s (GSK) consumer business – comes nearly two years after its Indian arm Hindustan Unilever Ltd (HUL) successfully merged with GlaxoSmithKline Consumer Healthcare Limited (GSKCH) in India, giving it access to health food drinks brands, such as Horlicks, Boost and Maltova in the country.

The 2020 deal has given HUL heft in the nutrition category in India. Unilever also acquired rights to health food drinks brands in around 20 other predominantly Asian markets.

On Saturday, GlaxoSmithKline said it has rejected three proposals from Unilever to acquire the GSK consumer healthcare business. The last proposal received on December 20, 2021 was for a total acquisition value of £50 billion, the company said in a statement. GlaxoSmithKline rejected all offers stating it “fundamentally undervalued" the business and its future prospects.

Unilever, on the other hand, confirmed its interest, stating that GSK consumer healthcare would be a “strong strategic fit" as Unilever continues to re-shape its portfolio that spans beauty products to foods and refreshments.

A possible deal between the two would give the maker of Dove soaps and Hellman’s mayonnaise, access to several large over-the-counter brands such as Crocin, Tums, as well as Sensodyne oral care products, among others.

Back in India, GSK continues to run separate businesses—a pharmaceuticals vertical and a fast-moving consumer goods business under GSK Consumer Healthcare that markets brands such as Sensodyne, Parodontax, Eno, Crocin and Otrivin in India.

However, in 2020, when HUL merged listed entity GlaxoSmithKline Consumer Healthcare Limited (GSKCH) with itself in a 31,700 crore deal— HUL got a ready-made portfolio of health food drinks' (HFD) brand Horlicks apart from Boost, Maltova and Viva. As part of the transaction, HUL also won distribution rights for brands Sensodyne, Crocin, Otrivin and Eno, for GSK in India. GSK will continue to be responsible for demand generation, portfolio strategy, R&D and marketing for these brands, the two said in 2020.

In the deal—first announced in 2018 -- HUL acquired brand Horlicks for India from GSK for 3,045 crore. Horlicks—the largest health foods drinks brand in India, commands over 60% market share in the category.

HUL outbid rival Nestle India and ITC Ltd., to acquire these brands in India stressing the importance of GSK's nutrition portfolio in the country.

“The merger is in line with HUL’s strategy to build a sustainable and profitable foods and refreshment (F&R) business in India by leveraging the megatrend of health and wellness," HUL said after announcing completion of the merger in 2020.

Meanwhile, HUL has been pressing ahead with the nutrition business in a bid to gain deeper market share and drive household penetration for brand Horlicks in India.

The nutrition and health drinks category remain "under-penetrated" in the country and HUL is well positioned to further develop the market given the extent of its reach and capabilities, it said then.

HUL has also launched Horlicks Diabetes Plus and is investing in market development—with the launch of 2 and 5 sachets in order to drive trials and unlock newer markets, brokerage Edelweiss Securities said in a December 2021 note.

The company has expanded distribution margin for brand Horlicks and is also pushing GSK's over-the-counter brands via pharmacy channels, according to a person familiar with the company's plans.

HUL has also doubled direct coverage of the nutrition business compared to pre-acquisition, the brokerage said in its note.

Meanwhile, prospects of a global deal remain uncertain.

In its statement GSK said that Unilever's proposals were "not in the best interests" of GSK shareholders. “The Board of GSK therefore remains focused on executing its proposed demerger of the consumer healthcare business, to create a new independent global category-leading consumer company which, subject to approval from shareholders, is on track to be achieved in mid-2022," GSK said in its statement.

GSK's consumer healthcare business is a joint venture between GSK and Pfizer, with GSK holding a majority controlling interest.

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