Connect with us

Governance

Unilever to buy GSK’s Indian Horlicks business for $3.8bn

Published

on

The logo for Unilever appears above a trading post on the floor of the New York Stock Exchange. Photo: AP Photo/Richard Drew.

 

INTERNATIONAL – Unilever is to buy GlaxoSmithKline’s Horlicks nutrition business for $3.8 billion (R51bn), boosting the Anglo-Dutch group’s position in India with the addition of the malted drink.

The deal, announced on Monday, increases the consumer goods giant’s footprint in one the world’s fastest-growing economies and marks a notable addition to the portfolio by outgoing Chief Executive Paul Polman, who steps down in January.

For GSK boss Emma Walmsley, it is a chance to further streamline operations and generate cash for increased investment in pharmaceuticals.

The sale follows a competitive auction in which Unilever saw off rival Nestle, as well as earlier interest from Coca-Cola.

The transaction covers GSK’s health food and drinks portfolio in India, Bangladesh and 20 other predominantly Asian markets. The business has annual sales of around 550 million euros, primarily through the malt-based Horlicks and Boost brands.

Horlicks comfortably dominates the health-drinks market in India and Unilever is expected to try and give it a fresh lease of life, following a slowdown in sales growth in recent years.

HUL finance head Srinivas Phatak told reporters he expected the business to grow at a double-digit percentage rate in the medium term, boosting both earnings and profit margins.

GSK’s decision to sell the business follows its $13 billion acquisition of Novartis’s stake in the two groups’ consumer health joint venture earlier this year. GSK said at the time that selling Horlicks could support the funding of the Novartis buyout.

The main asset being sold is GSK’s 72.5 percent stake in Indian-listed GlaxoSmithKline Consumer Healthcare.

Unilever said its 3.3 billion euros ($3.75 billion) consideration would be paid in cash and shares in its subsidiary in India, Hindustan Unilever Limited.

Shares in both Indian companies rose more than 4 percent on Monday.

GSK said its net proceeds from the deal, after tax and hedging costs, were expected to be around 2.4 billion pounds ($3.1 billion).

Following the closure of the deal, which is expected in around 12 months, GSK will own approximately 5.7 percent of HUL and the British drugmaker intends to sell this down in tranches.

The price being paid for the GSK business is broadly in line with expectations. People familiar with the process had told Reuters it was likely to be sold for less than $4 billion.

Horlicks traces its history back to 1873, when two British-born men, James and William Horlick, founded a company in Chicago to manufacture it.

It was taken to India by soldiers who had fought with the British Army in the First World War.GSK was advised by Morgan Stanley and Greenhill, while BofA Merrill Lynch worked with Unilever.

Sold as a bedtime drink in Britain, it was developed into a much bigger brand by GSK in India, although more recently its growth as slowed as urban Indian consumers turn to healthier, less-sugary alternatives.

Reuters

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Company News

Vodafone holds off deploying Huawei in core network due to security row

Published

on

By

The Vodafone logo is seen at the Mobile World Congress in Barcelona, Spain, February 28, 2018. REUTERS/Sergio Perez

 

LONDON: 25 January 2019: Vodafone, the world’s second largest mobile operator, said it was “pausing” the deployment of Huawei equipment in its core networks until Western governments give the Chinese firm full security clearance.

The United States and some allies, including Australia and New Zealand, have banned Huawei from 5G networks because of alleged ties to the Chinese government, while the firm has denied that its technology could be used by Beijing for spying.

Vodafone’s Chief Executive Nick Read said on Friday after reporting third-quarter results that the debate was playing out at a “too simplistic level”, adding that Huawei was an important player in an equipment market which it dominates along with Ericsson Sweden’s Ericsson and Nokia.

“We have decided to pause further Huawei in our core whilst we engage with the various agencies and governments and Huawei just to finalise the situation, of which I feel Huawei is really open and working hard,” Read said.

Poland is set to exclude Huawei from 5G after it arrested a Huawei executive earlier this month on spying allegations. Huawei fired the man, who has denied wrongdoing.

Europe’s mobile industry would face higher costs and delays to faster networks if authorities imposed a blanket ban on Huawei equipment, particularly the radio technology deployed on mobile towers, Vodafone’s Read said.

Operators in Europe such as BT and Orange, have already removed Huawei’s equipment or taken steps to limit its future use.

Read said Huawei’s equipment was used in Vodafone’s core – which he described as the intelligent part of the network – in Spain and some other smaller markets.

European governments and security agencies had not pressurised Vodafone into taking the step, but the “noise level” had increased, and the debate now needed more facts, Read said, adding that governments in Africa and the Middle East, where Vodafone also uses Huawei, had not raised concerns.

A spokesman for Huawei, which become the world’s biggest telecoms equipment maker earlier this decade despite being shut out of the U.S. market, said it had been a long-term strategic partner to Vodafone since 2007.

“Huawei is focused on supporting Vodafone’s 5G network rollouts, of which the core is a small proportion. We are grateful to Vodafone for its support of Huawei and we will endeavour to live up to the trust placed in us,” he said.

However, Read said that Vodafone had already agreed terms with a range of 5G suppliers, so moving away from Huawei in parts of the roll-out would not incur additional costs.

TOUGH END TO YEAR

Shares in Vodafone fell after it reported a deterioration in its key revenue measure in the third quarter, down 40 basis points quarter-on-quarter to 0.1 percent, reflecting price competition in Spain and Italy and a slowdown in South Africa.

Analysts had expected growth of 0.3 percent and the stock fell to its lowest level since July 2010 after the update, trading down 2.9 percent at 140 pence at 1245 GMT.

Vodafone said, however, that competition in the Spanish and Italian markets had moderated through the quarter and it improved its level of churn, or the number of customers leaving, by two percentage points year-on-year.

The company’s Chief Financial Officer Margherita Della Valle said the performance improvements would start to show in the top line after the current quarter.

“We expect as we enter into the next fiscal year to start seeing the benefits in terms of revenue growth,” she said.

Analysts at UBS said Vodafone performed well in net adds and churn across Europe, but they expected fourth quarter service revenue to drop to –0.5 percent, driven by weakness in Spain and tougher comparatives in Britain.

“This is disappointing relative to prior comments that service revenues would be similar to the +0.5 percent seen in Q2,” they said.

Vodafone’s reiterated its guidance for this year of around 3 percent growth in underlying adjusted core earnings, with free cash flow before spectrum costs of about 5.4 billion euros.

Reuters 

Continue Reading

Governance

Euro zone bond yields slide as Brexit, U.S. shutdown sap risk appetite

Published

on

By

Britain’s Prime Minister Theresa May speaks in the House of Commons in London on Jan 15, 2019 ahead of the meaningful vote on the Government’s Brexit deal. (Photo: AFP/Mark Duffy/UK Parliament)

 

LONDON – 17 January 2019: Euro zone bond yields edged lower on Thursday after rising the day before, as markets continued to assess the outlook for the UK, and the U.S. shutdown failed to provide much direction to markets.

Eurozone bond markets have taken their cue this week from Britain, where Gilt yields rose on Wednesday after the UK parliament rejected a Brexit agreement.

Britain remained in focus after UK Prime Minister Theresa May survived a no-confidence vote on Wednesday night, though uncertainty over the passage of Britain’s exit from the European Union rumbled on.

Germany’s 10-year government bond yield, the benchmark for the region, opened 1.6 basis points lower to 0.207 percent while other 10-year bond yields in the euro zone slid around two basis points.

Euro area inflation figures, released at 1000 GMT, are expected to confirm flash estimates and drop to 1.6 percent year-on-year from 1.9 percent, brought down by lower gas prices.

The data “won’t give the markets any hint because of the storm in British Parliament and the prospect of delay in their departure from the euro zone,” said Commerzbank’s rate strategist, Rene Albrecht.

However, euro zone data are likely to surprise to the upside, Albrecht said. “We expect better data than sentiment indicators are. We think yields should bottom out at the long end.”

New supply is due from Spain, which will tap its 2021s, 2023s, 2024s and 2027s to raise 4 billion to 5 billion euros.

Elsewhere, Italian five-year government bonds continued to perform following Italy’s successful 15-year bond sale, which prompted a follow-on rally in Italian government bonds.

Italy’s five year government bond fell 13.5 basis points on Wednesday, its biggest one-day fall in over a month.

GOOD FOR GREECE Greek bond yields fell on Thursday after Prime Minister Alexis Tsipras won a confidence vote in parliament, triggered by Greece’s approval of an accord to end a dispute over Macedonia’s name, which averted the prospect of a snap election.

Greece is widely expected to return to the debt markets in the coming weeks, with Italy’s deal likely to provide confidence to the southern European nation.

EU Economics Commissioner Pierre Moscovici said on Wednesday that Greece should regain full access to the debt markets and all efforts should be made to that end.

Greece’s 10-year government bond yield slipped in early trade to its lowest level since December 13 at 4.22 percent .

Continue Reading

Company News

Diet Coke Unveils New Flavors and Marketing as Brand Refresh Enters Second Year

Published

on

By

Diet Coke entered a new era in 2018 by debuting a modern new look, sleek new packaging, four bold new flavors and new marketing – with the goal of reenergizing and contemporizing the beloved brand for new drinkers and loyal fans alike.

And in 2019, America’s top-selling zero-calorie sparkling beverage is picking up where it left off with the introduction of two more flavors – Blueberry Acai and Strawberry Guava – and releasing new content as part of the “Because I Can” campaign.

The restage helped spark a 2018 turnaround for the brand, which posted retail dollar sales growth in Nielsen measured channels for four consecutive quarters after at least five years of decline.

Diet Coke

“We focused on modernizing Diet Coke to appeal to a new consumer base while at the same time connecting with our core drinkers by preserving the essence of what makes this brand so special,” said Rafael Acevedo, group director, Diet Coke. “We took smart risks in our approach to this holistic brand restage, and everything worked together to generate excitement and draw new fans to the brand.”

Diet Coke Blueberry Acai and Diet Coke Strawberry Guava were selected from a shortlist of 20 options and tested with more than 2,000 Americans. The new flavors will offer even more variety to the existing Diet Coke lineup, which also includes Ginger Lime, Feisty Cherry, Zesty Blood Orange and Twisted Mango. They aim to satisfy adventurous fans’ thirst for bolder tastes and more dynamic experiences.

“These new flavors are highly incremental to our current flavors and will continue to drive excitement for the brand,” Acevedo said. “Flavor variety is key because it provides more points of entry into the brand. Different consumers have different favorites, so it’s important to offer a range. And we’re finding that when new drinkers try a flavor, they’re also more likely to reach for (original) Diet Coke.”

Both flavors, which hit stores nationwide in mid-January, are available in sleek 12-oz. cans and sold as on-the-go singles and in eight packs. A nationwide sampling activation will give people the chance to experience the new flavors through August. The six-month tour will hit 15 cities and more than 100 college campuses runs through August and. Learn more at DietCoke.com.

Fresh new marketing will launch in the coming weeks across all channels – from TV, to social, to experiential – and will extend the “Because I Can” invitation for fans to live life confidently and on their own terms.

“Last year’s campaign introduced Diet Coke’s new personality and philosophy,” said Tara Mathew Sahu, integrated marketing communications (IMC) director, Diet Coke. “As we enter year two, we aim to show how the brand delivers a refreshing boost to everyday moments.

Blueberry Acai

She added, “Many of our newer fans were not even born when Diet Coke first launched in 1982, so they may see the brand as a choice of generations before them. We’re reframing the brand in a youthful, energetic and aspirational tone and showing how Diet Coke can fit into their lives.”

Acevedo said that while he’s encouraged by the brand’s rebound over the last year, the team has its eye on the long term.

“You don’t restage a brand the size of Diet Coke in one quarter or one year,” he added. “This is a multi-year plan, so it’s important to stay focused on our core strategy.”

Source: Nielsen AMC, Full-Year 2018

Continue Reading

Subscribe via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1,705 other subscribers

Ads

Download BAO Brochure

Click on the Image below to download our recently published Magazine

Most Viewed