Indian FMCG companies are hyperactive on cross-border M&As in search of new markets. In its first-ever overseas acquisition, FMCG player Dabur today said it has acquired Turkish personal care firm Hobi Kozmetik Group for $69 million (about Rs 324 crore) as part of its strategy to strengthen its presence in the Middle East and North Africa, it said in a statement.
"This acquisition is an important step towards further consolidating and expanding our already substantial presence in the Middle East and North Africa region," Dabur India Chairman Anand Burman said in a statement. At present, Dabur sells its products in over 60 countries through its subsidiary Dabur International.
The company said, it has fully acquired three Hobi Group firms-- Hobi Kozmetik, Zeki Plastik and Ra Pazarlama through its overseas subsidiary Dabur International for $69 million. The transaction is expected to be completed by the third quarter of this fiscal.
"The acquisition offers Dabur an entry into an attractive new market like Turkey, and adds to our portfolio a host of popular international brands that enjoy pole position in their respective categories,” Dabur India CEO Sunil Duggal said.
Set up in 1974, Hobi Kozmetik is a maker of personal care products in Turkey and sells a range of hair care and skin care products under 'Hobby' and 'New Era' brands across 35 countries, including the Middle East and North Africa.
"Hobi's brands complement Dabur's portfolio, categories, offering us a strong platform to enter newer product categories and markets", Duggal added.
This is Dabur's first major acquisition after it took control of Mumbai-based Fem Care Pharma Ltd (FCPL), a leading player in the women's skin care products market, for Rs 203.7 crore for 72.15% stake in an all-cash deal in 2008. Later the company acquired additional 20% through an open offer for Rs 54 crore.
It's other domestic acquisitions include: Balsara Hygiene Products Ltd, Balsara Home products Ltd and Besta Cosmetics Ltd. Dabur India scrips were trading at Rs 206.2 per share, down 2.55% from the previous close in the afternoon trade at the Bombay Stock Exchange.
FMCG Cos High On Overseas Acquisitions
“Most of the FMCG companies have not performed well over the last two – three quarters because the Indian growth story is limited, and they need to look at opportunities outside India to grow. Godrej led the way for overseas acquisitions and others are following it,” said Ashwin Shetty, analyst, FMCG sector, Execution Noble. Shetty added that since most of the FMCG companies are cash generating machines, they need avenues to make further investments, and would essentially be targeting the growing economies of Africa and South east Asia.
Wipro Consumer Care Ltd acquired UNZA Holdings Pte Ltd and brand rights for Yardley in Asia, Middle East and Australasia. As one of the most active FMCG companies making overseas acquisitions, Godrej acquired Rapidol (Pty) Ltd, Kinky Group (Proprietary) Ltd, Keyline Brands Limited, Godrej SCA Hygiene Ltd., Tura International Ltd., PT Megasari Mamsur and Issue Group Co.
On valuations on the FMCG space, Shetty added, "With the FMCG sector having outperformed the BSE 500 by 8% since March 2010, the sector is currently trading at a punchy valuation of 26x FY11 earnings. With markets seemingly ignoring the earnings headwinds likely to emanate from increased competition and volume deceleration, the prospects for investment returns from the sector remain poor. However, given the sector’s traditional resilience to upheavals (and consequent defensiveness in a tricky investment climate), the FMCG companies better placed than others in the current competitive environment."