Burmans-led FMCG firm Dabur has struck its second overseas acquisition in three months and is buying out US-based hair care companies belonging to Namaste Group — Namaste Laboratories LLc, US, Hair Rejuvenation & Revitalization Nigeria Limited, Healing Hair Laboratories International LLc, US, and Urban Laboratories International LLc, US, along with the latter’s South African branch–for a total consideration of $100 million.
Founded in 1996 by Gary Gardner, Chicago-based Namaste Labs markets products under the brand Organic Root Stimulator and specially targets the ethnic haircare products market for Africans and African Americans. Its revenue is said to be around $90 million and it is a profitable company. It sells products for hair loss, damaged hair, thinning and drying and itchy scalp.
Dabur is especially interested in using the company to grow its African business besides generating more revenues from the US that accounts for over three-fourths of Namaste’s revenues. The deal is expected to be completed by December-end.
This comes close on the heels of Dabur making its first overseas acquisition in September by purchasing Turkish personal care company Hobi Kozmetick which has a presence in Middle East and North Africa for around $69 million. The two deals will add to Dabur’s international revenues that accounted for a fifth of its annual sales of Rs 3,400 crore for the year ended March’10.
As per a report in ET, Gary Gardner and his management team will continue to run the Namaste business as a wholly-owned subsidiary of Dermoviva Skin Essentials Inc, which in itself is a subsidiary of Dabur India. The news report also added, Namaste’s North American sales team will be paid an additional $40 million if it doubles sales in four years.
As overseas acquisition appetite of Indian firms perk up after a momentary slowdown in 2008-09, FMCG firms have been quite active to look beyond domestic demand to boost their business. Dabur is among a bunch of Indian consumer product companies that includes other top rung firms such as Marico, Godrej, and Wipro Consumer Care that have been acquiring firms abroad.
While, on the one hand, this reflects the objective to become multinationals and specially tap other emerging markets in Africa, West Asia, Southeast Asia, Latin America and South Asia, it also signals growing competition from smaller regional brands back home that have been eating into one big chunk of the market and forcing them to compete with lower margins.
Among the recent buys, Wipro Consumer’s overseas acquired Singapore-based personal care products maker Unza Holdings besides the Yardley brand in Asia, West Asia, Australasia and certain African markets. Godrej snapped up Kinky in South Africa, Tura in Nigeria, Megasari in Indonesia, besides Issue Group and Argencos in Argentina.