GlaxoSmithKline Considering Merger of Indian Subsidiary

By Ian Walker and Denise Roland

GlaxoSmithKline PLC (GSK.LN) said Thursday it is considering a potential merger of its majority-owned Indian subsidiary, but cautioned that there's no certainty any deal will be struck.

Any such merger is likely to be related to the sale of Glaxo's nutrition business, which makes the vast majority of its revenue in India through the subsidiary, called GlaxoSmithKline Consumer Healthcare Ltd.

Glaxo is currently in talks with Unilever PLC (ULVR.LN) over the sale of its nutrition business, the Wall Street Journal reported Tuesday, citing people familiar with the matter. GlaxoSmithKline Consumer Healthcare Ltd. is mainly concerned with selling its parent company's nutrition products in India, but it also sells the company's non-nutrition brands, like Sensodyne toothpaste, there.

Glaxo had previously said it may sell its 72.5% stake in the Indian subsidiary, but not that the subsidiary could be merged with whoever buys the nutrition business.

"In response to recent press speculation, GSK confirms that consideration is being given to a potential transaction that includes a merger of GSKCH [GlaxoSmithKline Consumer Healthcare Ltd.]," Glaxo said in a brief statement.

The WSJ said that if finalized, a deal would end a monthslong auction process that also drew interest from Nestle SA (NESN.EB) and Coca-Cola Co. (KO), who were all eager to bolster their presence in one of the world's most promising consumer markets.

The centerpiece of GSK's nutrition business is the Horlicks brand, a malted-milk drink that is popular in India.

Some analysts have suggested Horlicks could be valued at as much as $3 billion, the WSJ said.

The deal could be completed in the coming weeks, one of the people familiar with the matter said.

The talks had been previously reported by the Financial Times.

Write to Ian Walker at [e-mail]; @IanWalk40289749 and Denise Roland at [e-mail]

(END) Dow Jones Newswires

November 29, 2018 07:42 ET (12:42 GMT)

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