Consumer products and services company Marico is acquiring the personal care brands, including Set Wet, Livon and Zatak among others, from Reckitt Benckiser for an undisclosed sum. Reckitt Benckiser had acquired these brands from Paras Pharmaceuticals as part of a bigger deal completed during April 2011.
The FMCG major had acquired private equity-controlled Paras Pharmaceuticals for Rs 3,260 crore ($726 million at that time). Private equity firm Actis, which acquired 63 per cent stake in the Ahmedabad-based firm in 2006, exited the investment along with Sequoia Capital India and the promoter group.
Paras Pharma, which owned over-the-counter (OTC) healthcare brands like Moov, DermiCool, D’Cold and Krack, had posted annual revenues of Rs 401.4 crore and an EBITDA of Rs 108.3 crore.
In the latest transaction, Marico is acquiring all key assets including the intellectual property rights, supply agreements and third party manufacturing agreements. These assets are in the process of being transferred to a separate company in which Marico will acquire 100 per cent equity. The closing of the transaction is scheduled to take place over the next few months.
The personal care products business of Paras is expected to achieve a turnover of more than Rs 150 crore during FY12. If the valuation of public-listed personal care products makers is taken as a benchmark, Marico could be paying around Rs 450-500 crore ($100 million) to buy the assets, as per VCCircle estimates.
Marico scrip rose over 2 per cent to close at Rs 165.2 a share on the BSE in a strong Mumbai market.
The deal was announced after trading stopped for the day.
Brands in the Paras personal care products portfolio are among the top three positions in the hair gel, male deodorant and leave-on hair serum categories. This acquisition gives Marico a strong presence in the rapidly growing deodorant and male grooming categories in India. And it will further reduce Marico’s dependence on edibles oils and hair oils.
Saugata Gupta, CEO (Consumer Products Business) of Marico, said, “It fast-forwards our journey towards creating a portfolio for the future with a significant presence in the male grooming and post-wash hair care segments.”
Milind Sarwate, group CFO and CHRO of Marico, said, “This strategic acquisition is a significant building block for value creation for Marico shareholders through profitable, sustainable growth over the long term. We will fund the acquisition through a judicious mix of internal accruals, equity and debt.”
The acquired brands include Set Wet (male grooming brand in India, particularly in hair gel and deodorant categories), Livon (specialty hair care brand with a strong position in the hair serum category, along with hair gain tonic addressing both hair fall and hair growth), Zatak (deodorants, cooling talc and hair gels), Eclipse (deodorants and beauty talc for women), Recova (age-defying and fairness skin cream ) and Dr Lips (medicated lip balm).
UK's Reckitt Benckiser To Buy Paras Pharma For $726M