HUL buys Indulekha, Vayodha brands for $49.8M

Consumer goods major Hindustan Unilever Ltd said on Thursday it has acquired Kerala-based Mosons Group’s Indulekha and Vayodha hair care brands for Rs 330 crore ($49.8 million).

The deal includes a deferred consideration of 10 per cent of the domestic turnover of the brands each year, payable annually for a five-year period beginning 2017-18, HUL said in a statement.

This is the first inorganic expansion deal for HUL in two years and the first deal where it has acquired a branded asset in nearly a decade, as per VCCEdge, the data research platform of VCCircle.

In 2013, it had bought the 74 per cent stake held by its partner in Aquagel Chemicals Pvt Ltd. Gujarat-based Aquagel makes soaps and detergents and was set up around two decades ago as a sister concern of privately held Madhu Silica Pvt Ltd, a key player in the precipitated silica market in India.

HUL’s last significant consumer-facing asset acquisition was of Modern bakery business way back in 2006. The firm recently sold this unit to PE firm Everstone.

With Indulekha, HUL would re-enter the hair oil market in India, which it exited in 2006 when it sold the Nihar brand to Marico. It continues to have a portfolio of products related to hair care with shampoos, however.

In the hair oil segment, the big names include Marico, Bajaj, Emami and Dabur.

In another deal in the hair oil business this year, Emami acquired Kesh King at an enterprise value of Rs 1,651 crore ($259.3 million then).

Indulekha was launched in 2009 as an Ayurvedic hair oil brand and has a significant presence in South India and the Gulf countries. It had revenue of Rs 100 crore and operating profit margin of 30 per cent for the year ended March 2015.

The HUL deal values Indulekha at a discount to the Emami deal. Kesh King was valued more than five times its sales. HUL has pegged a valuation of around 3.3 times Indulekha's sales. Deals in the branded FMCG industry are typically based on sales revenue multiples.

Shares of HUL rose 1.2 per cent to close at Rs 864.10 in a strong Mumbai market on Thursday.

Mosons operates five divisions: Mosons Extractions (hair and skin care products), Mosons Edibles (edibles from Beevis Pickles and Beevis Masala), Mosons Estates (general contracting firm), Mosons Engineering (ground-level engineering mechanisms) and Mosons Everything (an online supermarket).

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