UPDATE 2-Unilever emerges as leading bidder for GSK's Indian Horlicks business -sources

business -sources@

* Unilever likely to trump Nestle -sources

* Assets likely to fetch less than $4 bln -sources

* Acquisition to strengthen Unilever's position in key market (Updates with own sourcing on Unilever's position, company comments)

HONG KONG/ZURICH, Nov 28 (Reuters) - Unilever PLC has emerged as the leading bidder in a tight contest for GlaxoSmithKline PLC's Indian Horlicks nutrition business, two people familiar with the situation told Reuters on Wednesday.

If it is able to clinch the deal, Unilever will trump fellow European consumer giant Nestle SA, which according to an Indian media report earlier on Wednesday was close to buying Horlicks and other GSK consumer healthcare assets in India.

Unilever and GSK, which owns 72.5 percent of Indian business GlaxoSmithKline Consumer Healthcare Ltd, were in exclusive talks, the Financial Times reported on Tuesday, citing people familiar with the sales process.

The acquisition will strengthen Unilever's position in India, an emerging market whose growing population and rising wealth make it attractive in the long term for companies trying to offset weak growth in Western markets.

GSK's assets, which include the popular malt-based drinks Horlicks and Boost, is likely to fetch less than $4 billion, said people close the deal, who declined to be identified as the information is confidential.

Earlier in the sale process, separate sources had told Reuters the assets could be valued at more than $4 billion.

Some analysts considered the $4 billion valuation high considering the Indian market for so-called health drinks - mostly dietary supplements or flavour enhancers typically drunk with milk - is seeing a slowdown in growth.

Urban Indian consumers are increasingly turning to healthier, less-sugary alternatives and natural products, analysts and industry sources said.

Last month, Kraft Heinz Co agreed to sell its popular health-drink brands Complan and Glucon-D, along with a some other brands and factories, to Indian pharmaceuticals and consumer company Zydus Wellness Ltd for 45.95 billion rupees ($648.6 million).

Still, Horlicks comfortably dominates the health-drinks market in India and a big consumer company with deep pockets is likely to give it a fresh lease of life, analysts and industry sources said.

GSK is conducting a strategic review of its nutrition brands in India and expects to conclude the process by the end of 2018, a spokeswoman for GSK India told Reuters.

A spokeswoman for Hindustan Unilever Ltd, Unilever's Indian subsidiary, declined to comment when contacted by Reuters. A spokesman for Nestle India said the company would not comment on "speculation".

Other bidders include Coca-Cola Co, which has been looking to expand in emerging markets, sources previously told Reuters.

($1 = 70.8400 Indian rupees)

(Reporting by Kane Wu in HONG KONG and Angelika Gruber in ZURICH; Additional reporting by Mekhla Raina and Tanvi Mehta in BENGALURU and Ben Hirschler in LONDON; Editing by Sayantani Ghosh and Christopher Cushing)