Unilever: trekking to Hindustan - FT.com Why would you do something like this? On Monday, investors could have bought shares in India's Hindustan Unilever for Rs500. On Tuesday Unilever, which already owns just over half of HUL, offered Rs600 to buy up to another 23 per cent of it. That values HUL at 36 times forecast earnings. Unilever's shareholders should be asking what they will be getting for such a huge valuation that they could not have bought more cheaply a day earlier. Unilever says the deal is earnings-enhancing. Irrelevant. And according to Morgan Stanley, the debt to finance the purchase costs €91m to service. In exchange, the company will keep €110m of HUL earnings that would otherwise have gone to minorities. So a €19m gain versus Unilever's forecast earnings of €5bn. Are there other reasons for such largesse? Cost savings are not one of them. Unilever already controls HUL, so it is tough to see where any new savings would come from. Any big change on that front requires full ownership. Unilever says that HUL is a valued local brand and that it does not want to buy out the rest. And the higher valuation accorded to HUL's shares (30 times earnings before Tuesday's offer, against 19 for Unilever itself) is a handy benchmark for Unilever's emerging markets business. That said, increasing the stake from 52 per cent to 75 per cent does make a full buyout easier if it ever decides to go down that route. But there might be a Machiavellian purpose. HUL minorities were aghast this year when Unilever increased the royalty charge that it levies over its Indian subsidiary from 1.4 per cent of sales to more than 3 per cent. New Indian regulations could beef up minority rights. Good reason, perhaps, for Unilever to increase its influence now. Whatever the reason, HUL shareholders should jump at the generous price. But Unilever's owners deserve a better explanation.