The race to buy Horlicks is on – and a major new player just got involved
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The race to buy Horlicks is on – and a major new player just got involved

Pharmaceutical giant GlaxoSmithKline (GSK) is selling its Horlicks brand in India, and there’s no shortage of potential buyers. Over the last few days, another mega-brand may have joined the race: Coca Cola. According to UK newspaper The Sunday Telegraph, GSK’s popular malted drink could be worth as much as $3.9 billion in India. Or rather, that’s the offer Coke is, allegedly, considering making. What will GSK use this windfall to finance? A bigger chunk of Novartis’s consumer healthcare business.

GlaxoSmithKline’s share price has appreciated by 11% so far this year

graph 1409 glaxosmithline

SOURCE: Yahoo Finance

If Coke does make a play for Horlicks, it won’t be the company’s first big acquisition this year. The company recently ponied up an impressive $5 billion to buy the Costa Coffee chain from Whitbread in the UK. That was Coke’s first foray into hot drinks – the Horlicks brand could be its second. At time of writing, however, nothing is certain. In an emailed statement, the world’s most popular cola brand wrote:

"As a matter of policy we do not comment on any speculative news. At this point in time there is nothing to report on the said matter."

Whatever Coke decides to do, The Sunday Telegraph claims there is no shortage of competition for the malted drink. Other names it cites as potential buyers include Nestle, Kraft, and Heinz. Nestle, in particular, as previously made its interest in Horlicks known.

Horlicks goes back 1400 years to two British-born brothers in Chicago. The drink was taken to India by Indian soldiers who fought with the British Army in the First World War. It became a massive hit amongst Indians, and still retains its popularity in the country.

Disclosure

Dominion holds GlaxoSmithKline in its Global Trends Managed Fund.


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