GlaxoSmithKline (GSK) is planning to sell its stake in Hindustan Unilever (HUL) in ‘tranches’ by early 2020, reported The Economic Times. The move follows GlaxoSmithKline Consumer Healthcare’s decision on December 3, 2018 to merge with the Indian unit of Unilever.
As per the report, GSK said it would sell its stake, close to six percent, in HUL once the merger was completed in early 2020. The approval for the merger between HUL and GSK Consumer is expected by December-end from the National Company Law Tribunal (NCLT) bench in Chandigarh, it added.
If the deal fructifies, the deal could value GSK’s stake in HUL at Rs 26,580 crore ($3.7 billion), based on HUL’s December 13 closing price of Rs 2,005.30 per share, or about 17 percent appreciation over its pre-merger price.
Moneycontrol could not independently verify the report.
In October, GSK said the value of HUL shares to be received on sale of Horlicks and other consumer healthcare brands had risen to 247 million pounds in nine months, with the cumulative increase in value since the signing of the deal being 345 million pounds.
“Following completion of the divestment of Horlicks in Q1 2020, we intend to sell down our holding in HUL. Such sell-down will be in tranches and at such times as GSK considers appropriate,” the article quotes Simon Steel, a spokesperson for GSK, as saying.
The article also quotes an HUL executive as saying, “This will be a market trade distributed among institutional investors and with no rights… Considering the size, it’s not clear yet if it will be done in a single tranche or in multiple blocks like Daiichi Sankyo and Sun Pharma in April 2015… GSK needs the cash to pay off its global obligations, so it would want to do it at the earliest as per its stated position.”
On December 3, 2018, HUL announced its decision to merge with GSK Consumer Healthcare in a deal that valued the latter at Rs 31,700 crore. Shareholders of GSK Consumer were to receive 4.39 shares of HUL for each share held. Post-merger, GSK was to emerge the second-largest shareholder in the merged entity with a 5.7 percent stake, with Unilever’s holding in HUL falling to 61.9 percent from 67.2 percent.
News Source:- moneycontrol