Two days after the $3.8 billion Unilever-GlaxoSmithKline deal was announced, the two sides are said to be forming teams to decide on the “integration or separation” of GSK Consumer Healthcare’s 3,800 employees.
With the transaction expected to be closed by 2019-end, GSK Consumer, the Indian unit of GSK, is working out plans to evaluate the performances of its 3,800 employees to determine who could move to Hindustan Unilever NSE - 0.87 % and who could potentially be given severance package , an official directly aware of the developments said.
A GSK Consumer spokesperson did not specifically comment on the employee performance evaluation matter. “It is business as usual till the deal gets closed, which is expected to be completed by end of 2019. Teams will be formed on both sides to complete the necessary activities between signing and close, and plan the transition, including separation from GSK and integration into HUL,” the GSK Consumer spokesperson said in response said in response to ET’s query.
The merger of GSK Consumer into Hindustan Unilever will give the Indian unit of Unilever rights to Horlicks, Boost and Maltova malted beverages. The all-stock deal, the biggest in India’s consumer sector, values GSK Consumer at Rs 31,700 crore. Industry experts said Hindustan Unilever will need talent from GSK Consumer to manage the acquisitions.
“There could be rationalisation in functions such as distribution or perhaps finance where there could be an overlap,” said K Sudarshan, managing director of executive search firm EMA Partners. “Since malt beverages are a new category for HUL where it doesn’t have the expertise, they will look to retain key talent from GSK.” With HUL also entering into a five-year distribution agreement for GSK Consumer’s over-the-counter products such as Crocin analgesic, Eno antacid, Iodex pain balm and Sensodyne toothpaste, there would be duplication of workforces.
These products are made in India by GSK Asia, which retains their marketing and other functions including research and development. GSK chief strategy officer David Redfern said on December 3, when the deal was announced, that there is no clause requiring HUL to retain all GSK Consumer employees. “That will depend on HUL’s merger plans. Once the two businesses come together, it will be for HUL to decide,” Redfern said.
HUL chairman Sanjiv Mehta had said that the second-year focus will be integration. “For the first one year, after the approvals, we are going to retain the same terms and conditions for the employees. We are a growing business, in need of talent. Obviously, we will have a choice of looking at a larger pool of talent on both sides. Thereafter, we will have to really talk through where is the rest of the business and where do you take it forward,” Mehta said.
HUL chief financial officer Srinivas Phatak had said that after the first year, the management will revisit the issue of staff integration.