Anglo-Dutch company Unilever has offered to pay $5.4 billion (over Rs.29,000 crore) to increase its stake in Hindustan Unilever to 75%, the largest acquisition deal in India’s consumer goods sector that comes at a time India’s lustre has dimmed for many foreign investors. The maker of Rin detergent, Lux soap and Knorr soups said the deal was driven by its desire for a bigger pie of HUL’s dividend outflow, and it had no intention of delisting its Indian unit.
“Unilever has no intention to delist the Indian unit,” said Lucila Zambrano, a spokeswoman for Unilever. “Indeed, the purpose of the offer is partly to increase Unilever’s share of the HUL dividend flow,” she said. The parent company plans to buy over 487 million HUL shares at Rs.600 each in a public offer to raise its holding to 75% from 52.48% at present. The offer represents a 20.6% premium over Monday’s closing share price and a 26% premium to the one month average price. The acquisition is Unilever’s biggest since its 2000 purchase of Best Foods for $23 billion and is the largest offer announced in the history of Indian capital markets. It becomes the second multinational to spend big money to hike its stake in its Indian unit after GlaxoSmithKline spent over $1 billion (Rs.5,222 crore) in February to raise its stake to over 70% from 43%, marking a break in a narrative of doom and gloom about the Indian economy.
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