Coca-Cola is mulling a £3-billion swoop for GlaxoSmithKline’s (LON:GSK) Horlicks business, The Telegraph has reported. The news comes after the blue-chip pharmco recently kicked off a review of the 145-year-old business.
GSK’s share price has fallen into the red in London this morning, having given up 0.37 percent to 1,550.20p as of 09:33 BST. The stock is marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.17 percent in the red at 7,621.22 points. The group’s shares have lost about eight percent of their value over the past year, as compared with about a 2.1-percent rise in the Footsie.
Coca-Cola could bid for Horlicks
The Sunday Telegraph reported over the weekend that Coca-Cola was among a string of potential bidders interested in GSK’s Horlicks business, with others including Kraft Heinz and Nestle, which have held early talks over a deal for the malted milk drink. Sources with knowledge of the matter told the newspaper that US investment bank Morgan Stanley was advising the FTSE 100 drugmaker on the sale. The brand, as well as some smaller nutrition products, could fetch £3 billion.
GSK kicked off a review of its Horlicks business earlier this year, when it also completed the buyout of Novartis’ stake in their Consumer Healthcare joint venture. The blue-chip pharmco expects to conclude the review around the end of the year.
Analysts on blue-chip pharmco
Jefferies, which sees GSK as a ‘buy,’ boosted its price target on the stock from 1,500p to 1,700p last week, while UBS, which also sees the blue-chip pharmco as a ‘buy,’ set a valuation on the shares of 1,600p. According to MarketBeat, the FTSE 100 drugmaker currently has a consensus ‘hold’ rating and an average price target of 1,551.90p.