GlaxoSmithKline (GSK) has listed 133.8 million shares in Hindustan Unilever (HUL) , raising some Rs254.8 billion ($3.35 billion).

WHO: A subsidiary of Unilever, Hindustan Unilever Limited (HUL) is India’s largest Fast-Moving Consumer Goods company with its products touching the lives of nine out of ten households in the country.

GlaxoSmithKline plc is a British multinational pharmaceutical company headquartered in Brentford, London.

WHY: Selling the Unilever shares marks an important step for GSK’s withdrawal from consumer health, centered on a planned spinoff of its joint venture with Pfizer. The British pharma strategy is to focus on higher-margin innovative drugs and vaccines.

IN THEIR OWN WORDS: “Exiting stake is a planned strategy as regards GSK. They never intended to keep holding on to this. While the deal is cash neutral for HUL, GSK will get around Rs26,000 crore from the stake sale via this block deal, which it can use to build a war chest in these Covid-19 impacted times. Investors—both foreign and domestic—have shown a good appetite for HUL stock. The deal will satiate this to some extent,” Ambareesh Baliga, an independent market expert, told Business Standard.

DETAILS:

• GSK received a 5.7% stake in the Indian company as part of the payment for the sale of a portfolio of assets that included health food drinks brands of Glaxo in India and Bangladesh. The transaction that was announced in December of 2018 was completed this month.
• GSK completed the divestment of Horlicks and Consumer Healthcare nutrition products in India to Unilever at the start of April.
• According to the term sheet, an over 133 million shares representing 5.7 % of the total equity shares are being offered in the range of Rs1,850-1,950 to investors through a special block window. The deal will be valued roughly between Rs24,600 crore to Rs25,900 crore.
• JP Morgan, Morgan Stanley, and HSBC are the book runners to the trade.