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In one of the year’s largest deals, FMCG major HUL on Monday said it will merge GlaxoSmithKline Consumer Healthcare with itself in an-all equity transaction pegged at ₹31,700 crore. The acquisition, experts said, is likely to lead to some job losses due to overlaps in certain support functions.
The two companies have said all employees of GSK Consumer Healthcare will become employees of HUL. But it’s not clear whether HUL will be able to absorb the entire workforce of the former, which stands at about 4,000 employees.
Focus on integration
BusinessLine mailed a query to HUL, but the company on Tuesday declined to comment. Yesterday, it had said it would put together a restructuring team once it gets shareholders’ and regulatory approvals.
The initial focus would be on integrating the businesses, it had added.
“There may be significant redundancies in the areas of marketing and distribution due to this merger,” remarked Arvind Singhal, CMD, Technopak Advisors. “HUL already has a huge distribution and sales field force and that will emerge as an area of duplication.”
Abneesh Roy, Senior Vice-President, Institutional Equities, Edelweiss Securities Ltd, said: “With any merger there are bound to be some redundancies due to overlaps in certain support functions. However, HUL has guided for 8-10 per cent margin expansion in the acquired portfolio, which we believe will be done more through operational improvements, go-to-market and distribution network optimisation and focus on harnessing scale efficiencies which will include focus on better returns on investments on ad spends.”
On Monday, while addressing a media roundtable, David Redfern, Chief Strategy Officer of GSK Plc, said: “HUL has said that they expect some synergis...exactly where...they will decide.
“They are buying the assets including the people of GSK Consumer Healthcare and there will be a lot of people that they would like to retain and want the capabilities that we have in manufacturing and R&D and distribution.
“I am sure there will be some overlaps in some places but that is for HUL to work out over the next year.”
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