Unilever is boosting its presence in India by buying some of the country’s top nutritional drinks.
The global consumer goods group is spending £3.1 billion ($3.9 billion) to buy most of the India consumer healthcare business owned by GlaxoSmithKline (GSK), including hugely popular beverage brands such as Horlicks and Boost.
The deal, announced on Monday, will see Unilever (UL) and GSK merge their India businesses, Hindustan Unilever and GSK India. GSK will hold a 5.7% stake in Hindustan Unilever after the deal closes.
Malted milk drink Horlicks has been positioned as a nutritional product for children in India, where it has dominated the market for years. The brand accounted for 45% of India’s health drink market in 2017, according to consulting firm RedSeer. That’s three times the share of its closest competitor Bournvita, owned by Oreo-maker Mondelez International (MDLZ).
Unilever will also be getting its hands on Boost, another of India’s most popular malted drinks. It has endorsement deals with some of India’s biggest sports celebrities, including cricket icon Sachin Tendulkar and the country’s current cricket captain Virat Kohli.
With the two brands, GSK accounts for more than 60% of India’s health drinks market, according to RedSeer.
Unilever will also buy GSK’s business in India’s neighboring country Bangladesh as well as nutrition brand rights for “certain other territories” at a price tag of £566 million ($723 million).
The deal reflects a push by global companies to cash in on India’s fast growing economy, including sectors such as retail, consumer goods and technology. Big names including Ikea, Walmart (WMT) and Amazon (AMZN) have poured billions into the country in recent years.
GSK said it will use the proceeds from the Unilever sale to shore up its other healthcare products in India, including over-the-counter medicines.
The deal still needs to be approved by the shareholders of Hindustan Unilever and GSK India, as well as by Indian regulators. It is expected to close by the end of 2019.