Announcing its fourth acquisition in the last three months, Godrej Consumer Products Ltd (GCPL) has further expanded its presence in the emerging markets with acquisition of South America based Issue Group. The deal gives Adi Godrej-led fast moving consumer goods firm, which has already announced buyouts in Asia and Africa in past months, a platform to expand its operations in Latin America.
Issue Group is a leader in Argentina's hair colour market with an over 20% market share. The market for hair colour in Argentina, which is pegged at $200 million, is growing at a CAGR of 22% annually, according to a release. The firm is also a top player in markets like Paraguay, Peru and Uruguay with a presence in Brazil. Issue Group had revenues of $33 million in 2009. The acquisition involves buying of a 100% stake in Laboratoria Ceuna, Consell SA, Issue Uruguay and Issue Brazil. Though the deal size was not disclosed, Issue Group has been valued at 8 times EBITDA and is expected to be EPS accretive from the first year of operations.
London-based investment bank Elara Capital advised GCPL on the deal.
The deal is part of GCPL's global 3 by 3 strategy, which involves a presence in Asia, Africa and Latin America in the three core categories of homecare, personal wash and haircare. Executing this strategy, it has acquired Tura in Nigeria and PT Megasari Makmur in Indonesia in recent months. It also consolidated its domestic operations with the buy out of Sara Lee in their joint venture Godrej Sara Lee - which markets Good Knight, Hit and Jet brands - for $234 million earlier this month.
VCCircle earlier reported that GCPL is also holding talks with private equity majors such as Carlyle, Standard Chartered Private Equity and ChrysCapital for raising around $130-$140 million as part of its overall capital-raising plans estimated at over $650 million to fund these acquisitions.
In FY10, GCPL reported consolidated revenue of Rs 2,042 crore (up 47%) with net profit of Rs 340 crore (up 97%). The company's key businesses are spread across the personal care segments of soaps, hair colours, toiletries and liquid detergents, with most of them operating at margins of over 20%.