GlaxoSmithKline (LON:GSK) has entered into exclusive negotiations with Unilever (LON:ULVR) to sell its nutrition business, which includes the Horlicks malted drink brand popular in India, the Financial Times has reported. The Anglo-Dutch giant has reportedly outbid rival Nestlé for the business.
GSK’s share price has climbed marginally higher in London this morning, having gained 0.06 percent to 1,565.00p as of 08:48 GMT, as compared with a 0.03-percent gain in the benchmark FTSE 100 index. Unilever’s share price meanwhile is underperforming the broader market, having given up 0.77 percent to 4,225.50p so far this Wednesday.
GSK in talks with Unilever
People with knowledge of the matter told the FT that Unilever had beat a rival bid from Nestlé for GSK’s nutrition business. The newspaper notes that while the Anglo-Dutch group’s offer price could not be determined, the pharmco’s Indian business is listed on the Bombay Stock Exchange, with a market value of $4.2 billion, meaning that GSK’s 72.5-percent stake in the business is worth roughly $3 billion without a takeover premium. The deal is also expected to include the FTSE 100 drugmaker’s Bangladesh-listed business.
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. In June, it emerged that Coca-Cola was mulling a £3-billion swoop for the business.
Analysts on FTSE 100 pharmco
HSBC, which rates GSK as a ‘buy,’ lowered its price target on the stock from 2,030p to 2,000p today, while last week, JPMorgan Chase & Co reaffirmed the pharmco as a ‘neutral,’ valuing the shares at 1,600p. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 1,527.84p.