The board of directors of Jyothy Laboratories Ltd approved the buy-out of 50.97 per cent stake in Henkel India Ltd from Henkel AG & Co. KGaA. In a deal structured by MAPE Advisory Group, Jyothy Laboratories proposes to acquire 59,360,203 equity shares at a price of Rs 20 per share, aggregating to Rs 1,187 million. The acquisition will elevate Jyothy Laboratories among the top five FMCG players in India.
Jyothy Laboratories had earlier acquired 14.9 per cent stake in HIL from the Indian promoter Tamil Nadu Petroproducts Ltd in March, 2011. It will now refinance the existing debt of HIL and also buy out the redeemable cumulative preference shares in HIL, held by Henkel AG. The aggregate debt owed by Henkel India Ltd to its lenders is approximately Rs 4,540 million. Jyothy Labs will purchase 68 million preference shares in HIL from Henkel AG for Rs 439 million, subject to regulatory approvals.
Further, Henkel AG will have an option to acquire up to 26 per cent of the equity share capital of Jyothy Laboratories Ltd through primary and/or secondary transactions, after a period of 5 years.
This acquisition will trigger the mandatory 20 per cent open offer to the public shareholders of HIL as per SEBI Regulations. MAPE Advisory Group will be the manager for the public offer.
M P Ramachandran, chairman & managing director of Jyothy Laboratories said, “This move will help us in strengthening our position in urban India. It will also give us access to any new product launches of Henkel AG & Co. KGaA in the future.”
Ullas Kamath, deputy managing director of Jyothy Laboratories said, “This is a transformational deal for Jyothy and we will enter the next phase of exciting growth with this move.”
Marco Swoboda, corporate vice-president, Henkel AG & Co. KGaA said, “We are happy to join forces with Jyothy Laboratories, bringing in R&D and international brands and benefiting from Jyothy’s outstanding competence in marketing and sales in India.”