The board of Godrej Consumer Products Ltd (GCPL) has approved the acquisition of a 51% stake in Godrej Sara Lee, a joint venture between the Godrej Group and the US-based Sara Lee Corp. GCPL could spend upto Rs 850 crore to purchase this stake and is now seeking shareholder approval for the same, it said in a filing to the stock exchange. The board of GPCL has also approved raising Rs 3,000 crore, part of which could be used to fund this acquisition. It will also use debt, internal accruals and proceeds from its right issue in 2008 to fund the deal.

The share prices of GCPL were up by more than 2.5% at 2 PM, trading at Rs 268.45. Some of the brands of GPCL include Good Knight, HIT, Jet, Ambipur, Brylcreem and Kiwi. Godrej Sara Lee posted revenues of Rs 755 crore and profit after tax of Rs 104 crore for FY09. It is the leading brand in domestic insecticide market and in the hair gel space.

The stake sale comes as Sara Lee Corporation is now planning to focus on its core food and drinks business in the US. Sara Lee earlier sold itsĀ  body-care business to rival Unilever and air-care business to Procter & Gamble. But Godrej still owns the rights to brands sell brands like Ambi Pur, Kiwi shoe polish and Brylcreem in India for the

next 2-3 years. Earlier reported have stated that Godrej may also bid for worldwide insecticides business of Sara Lee, for which it will have to shell out $500 million. Around 80% of the sales for Godrej Sara Lee come from the brands owned by Godrej.

The deal would to consolidation of business by the Godrej group. Last year it acquired the 50% stake in its JV that manufactures baby diapers and sanitary napkins from Swedish company SCA Hygiene Products. Another one of its recent acquisitions is South Africa's

hair accessory maker Kinky in April 2008.

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