GSK sells its entire 5.7% holding in HUL for over Rs 25,000 crore

More than 133 million shares of HUL were sold in the Rs 1,900-1,950 range, via multiple large transactions in morning trade

The UK-based Glaxo-SmithKline (GSK) sold its entire 5.7 per cent stake in Hindustan Unilever (HUL) for more than Rs 25,000 crore on Thursday. More than 133 million shares of HUL were sold through multiple large transactions in the morning trade, the Bloomberg data showed. The shares were sold in the range of Rs 1,900-Rs 1,950.

According to the NSE data, Société Générale bought 12.9 million shares for Rs 2,450 crore at Rs 1,902 apiece. Investment bankers said large MFs and global funds were also among the buyers.

Because of the share sale, the HUL stock saw wild swings -- it hit a low of Rs 1,902 and a high of Rs 2,007 on the NSE. It settled at Rs 1,998, down 0.6 per cent over the previous day’s close.

The HUL counter clocked a trading turnover of nearly Rs 36,000 crore on the NSE. Nearly 75 per cent, or Rs 27,000 crore, worth of the traded quantity was delivery-based.

GSK in a press release said the proceeds from the transaction were more than it had earlier anticipated. “When GSK originally announced the divestment of Horlicks in December 2018, the company expected gross proceeds from the overall transaction to be approximately £3.1 billion (Rs 29,000 crore at the conversion rate of Rs 93.5 for £1) and net proceeds to be approximately £2.4 billion (Rs  22,440 crore) after hedging costs, taxes and other expenses had been settled.  With the appreciation of HUL's share price since then, GSK now expects gross proceeds from the divestment to be £3.4 billion (Rs 31,800 crore) and net proceeds from the divestment to be £2.9 billion (Rs 27,115 crore). 

This includes the proceeds received on the closing of the transaction on April 1, 2020, and the expected proceeds from the sale of our Bangladesh business, which is expected to close later this year,” GSK said in a press release on Thursday.  

Analysts said the success of the share sale was positive for the stock. “We believe this is a good time to add HUL, given its structural soundness and the alleviation of stake sale overhang,” said Abneesh Roy, analyst at Edelweiss. The brokerage has a price target of Rs 2,550 for the stock.

“Although the lockdown would affect near-term volumes, we expect volumes and earnings to bounce back once the situation normalises. We maintain ‘BUY/SO’ with a target price of Rs 2,550. The stock is trading at 51.5 times FY22E EPS. We retain HUL among our top sector picks,” he said.

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