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Aug, 23 2018

Kellogg & Reckitt Benckiser join race to buy GSK's Horlicks

Other major players said to be looking at acquiring the Horlicks brand include Nestle, Unilever, Mondelez and Coca-Cola.

Cereal maker Kellogg and British healthcare company Reckitt Benckiser Plc have entered the race to buy GlaxoSmithKline's (GSK) consumer nutrition business, which includes Horlicks. Other major players said to be looking at acquiring the Horlicks brand include Nestle, Unilever, Mondelez and Coca-Cola.

Both companies have completed their initial evaluations of the deal. Rothschild is advising Kellogg and Goldman Sachs is advising Reckitt Benckiser. While Kellogg’s entry into the competition is seen as a surprise, Reckitt Benckiser has been growing inorganically across the world with its last acquisition in India being Paras Pharmaceuticals eight years ago.

Reckitt said, “The Mead Johnson acquisition has taken RB into a global market leader in consumer health and foods. Mead Johnson’s geographic footprint significantly strengthens our position in developing markets, which account for approximately 40% of the combined group’s sales.” 

If Reckitt Benckiser is successful in acquiring GSK's Horlicks, then it is likely to reformulate the brand beyond just a milk-based beverage and sell it at chemists and pharmacies instead of traditional grocery. There are also product synergies between Reckitt Benckiser's products and GSK's over-the-counter (OTC) offerings such as Crocin, Sensodyne and Eno.

A top industry executive, closely associated with the company, said, “Kellogg India doesn’t have the resources to push such a mega deal. Besides, historically, it hasn’t been aggressive in India, and neither has it explored acquisitions, instead, basing its strategy only on localisation, pushing small packs and moving beyond breakfast to cereal-based snacking, which is witnessing intensified competition.” 

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