Godrej Consumer Products Ltd (GCPL) has entered into an agreement to acquire Strength of Nature LLC (SON), a hair-care products company for women of African descent.
GCPL said the acquisition is aimed at scaling up its presence in Africa. It has been building domain presence in hair-care products for users with African descent.
The acquisition is expected to be earnings per share (EPS) accretive for GCPL from year one itself, as per a press statement.
“Over the past few years, we have been scaling up our international presence with acquisitions mainly in emerging markets in Asia, Africa and Latin America through three core categories – hair care, home care and personal care,” said Adi Godrej, chairman, Godrej Group.
SON, a US-based company with a significant presence in Africa and the Caribbean, has a large portfolio of products in wet hair care across relaxers and shampoos. This includes brands such as African Pride, TCB, Just for Me, Motions and Profectiv Mega Growth.
The company, which claims to be supplying its products to nearly 50 countries, particularly in the African continent, had revenues of Rs 629 crore ($95 million) in financial year 2014-15.
“The Strength of Nature portfolio will enable us to address the entire hair-care needs of women of African descent,” said Vivek Gambhir, MD at GCPL.
Gambhir said the company will reap rich dividends from the deal as African American women spend more than three times on hair care than other women in the region.
SON president Mario de la Guardia said Godrej’s expertise will enable the firm to serve consumers and communities better and tap into new growth opportunities across the world, particularly in Africa.
This is the third deal struck by GCPL in Africa this year. Last month, it increased its stake in DGH Phase Two Mauritius, which owns Kenya’s Style Industries Ltd, to 90 per cent from 51 per cent for an undisclosed amount in cash.
In February, GCPL acquired a 75 per cent stake in Kenyan home- and personal-care products maker Canon Chemicals Ltd for an undisclosed amount.
Gambhir had earlier told VCCircle that the company was looking at large-sized transactions in Africa, where it has annualised revenues of about $200 million.
The Mumbai-based company has previously made several other acquisitions overseas. Last year, it bought the 40 per cent stake it didn’t already own in Chilean hair colour cosmetics company Cosmetica Nacional for an undisclosed amount.
It also agreed to acquire the hair extension business of the South Africa-based Frika Hair (Pty) Ltd for an undisclosed amount last year. In February last year, it signed a pact with the African hair-care company Darling Group Holdings to hike its stake in its two units in South Africa and Mozambique to 90 per cent.
Besides hair-care products, GCPL makes household and other personal-care products under brands such as Good Knight, Cinthol, Godrej No. 1, Hit, Fairglow, Ezee and Protekt.
One of GCPL’s investors is Temasek. In 2012, the Singapore government’s investment unit had invested Rs 685 crore ($135 million then) to buy a 4.9 per cent stake in the Indian company in what was the single-largest alternative investment deal in the local consumer goods industry. Last quarter, Temasek sold part of its stake in the firm.