GSK offloads stake in Hindustan Unilever for over Rs 25,000 crore

GlaxoSmithKline headquarters in Brentford following the outbreak of the coronavirus disease (COVID-1

GlaxoSmithKline headquarters in Brentford following the outbreak of the coronavirus disease (COVID-1

The all-equity merger transaction saw shareholders of GSK CH India getting 4.39 shares of HUL for every one share of GSK CH India.

"Its sales during the quarter under review slipped 9.61 percent to 9,055 crore, as against Rs 10,018 crore in the corresponding period a year ago, Hindustan Unilever Ltd (HUL) said in a regulatory filing".

In early April, GSK received HUL's shares in return of the sale of its Indian consumer business, GlaxoSmithKline Consumer Healthcare Ltd, to HUL. The names of the buyers were not immediately known.

Shares of Hindustan Unilever Limited (HUL) gained over 3 percent on Friday after foreign portfolio investor Societe General picked up 1.29 crore shares of the 5.69 percent stake off-loaded by GSK on Thursday. The deal, the biggest such transaction in India's stock market, was done at an average price of Rs 1,905 per share, the exchange's block deal data showed.

Through the merger of GSK India with HUL, GlaxoSmithKline acquired a 5.7% stake in HUL - a public company listed on the Indian National Stock Exchange and the Bombay Stock Exchange.

The deal will be valued roughly between Rs 24.75 crore and Rs 26.09 crore ($3.2-3.4 billion).

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Brokerages remain positive on the stock after the stake sale.

Global research firm Credit Suisse maintained its outperform call on the stock with target of Rs 2,400 per share. Moreover, cost savings from fewer promotional campaigns would once again boost EBITDA margin.

They added that the first quarter of the current fiscal will see HUL benefiting from pent-up demand and an upswing in categories such as health, hygiene and nutrition, whereas discretionary categories such as beauty and personal care and out-of-home consumption would suffer.

In the statement, GSK said it would now receive net proceeds from the Horlicks divestment of 2.9 billion pounds ($3.59 billion), up from its original expectation of 2.4 billion pounds.

'With the appreciation of HUL's share price since then, GSK now expects gross proceeds from the divestment to be £3.4bn and net proceeds from the divestment to be £2.9bn, ' the company said.

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