SmithKline Beecham Consumer is buying out the 'Maltova' and 'Viva' brands from Jagatjit Industries for a consideration of Rs 863 m.
SmithKline Beecham Consumer Healthcare (SBCH) manufactures malted food under the brand names – Horlicks and Boost. Its product range also includes 'Gopika' ghee and biscuits. Horlicks commands 54% market share, while Boost has 10% market share.
The acquisition, which was rumoured to have taken place in December itself, has been made official only now. The move will add 6% to the company's market share and strengthen the company's presence in the northern markets. This acquisition also reflects on the parents interest in the company, that had become suspect after it set up a 100% subsidiary on India.
Competition in the malted food drink segment has been becoming increasingly intense with both Nestle and Cadbury increasing their promotion expenditures. Although SBCH will gain market share, it will have to increase its advertising expenditure significantly. This could adversely affect margins.
GSK Consumer Healthcare declared results for the quarter ended September 2016. The revenues dropped by 1.3% during the quarter as compared to a year ago; while the profits declined by 16.6% YoY during the quarter.
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