Horlicks goes up for sale as GSK looks to boost takeover funds

GlaxoSmithKline is putting Horlicks up for sale to help fund a buyout of the remaining $13bn stake in its consumer healthcare joint venture with Novartis.

GSK said it was starting a “strategic review” of the 145-year-old malted drink and its other consumer healthcare nutrition products, as it announced plans to buy Novartis’ 36.5% in the joint venture, formed in 2015.

The deal with Novartis will give GSK full control of a portfolio of products that includes Sensodyne toothpaste, Panadol headache tablets, muscle gel Voltaren, and Nicotinell patches.

The company said: “GSK is initiating a strategic review of Horlicks and its other consumer healthcare nutrition products to support funding of the transaction, and to drive increased focus on over-the-counter and oral health categories. Combined sales of these products were approximately £550m in 2017.”

Horlicks was invented in 1873 by British-born brothers, William and James Horlick, who had emigrated to the US. They opened a factory in Slough in 1908, and Horlicks became popular as a lightweight, non-perishable, and high-calorie food supplement.

During the second world war, Horlicks tablets were popular among soldiers and were carried by aircrew in their escape kits.

Announcing the review, GSK said the majority of Horlicks sales were generated in India, where the drinks range was seen as a portfolio of premium nutrition products.

“GSK expects the outcome of the strategic review to be concluded around the end of 2018. There can be no assurance that the review process will result in any transaction,” the company added.

The FTSE 100 company said India would continue to be one of its priority markets, where it would target growth in its over-the-counter and oral health brands, such as Sensodyne and Eno.

Commenting on the deal, GSK’s chief executive Emma Walmsley, said: “The proposed transaction addresses one of our key capital allocation priorities and will allow GSK shareholders to capture the full value of one of the world’s leading consumer healthcare businesses.”

She added that it would benefit adjusted earnings and cash flows, as well as removing “uncertainty”, allowing the company to better plan investment in priority areas, especially pharmaceuticals research and development.

Last week GSK pulled out of the bidding to buy Pfizer’s $20bn consumer healthcare business.