Global consumer goods major Reckitt Benckiser Group plc has acquired private equity controlled Paras Pharmaceuticals fo Rs 3,260 crore or $726 million. Private equity major Actis, which acquired a 63% stake in 2006 in the Ahmedabad-based firm, will be exiting in this deal along with Sequoia Capital India and the promoter group. Paras Pharma owns over-the-counter (OTC) brands like Moov, DermiCool, D'Cold and Krack with revenues of Rs 401.4 crore and an EBITDA of Rs 108.3 crore.
The deal comes at nearly 30.1 times FY10 EBITDA numbers as enterprise valuation, almost reflecting Abbott's deal to acquire Piramal's prescription business for $3.72 billion. The deal would be one of the largest M&A exits for a private equity controlled firm in India. Assuming returns in proportion with its stake, Actis will rake in $457 million through this deal while Sequoia's 7-8% stake will bring in around $50 million. The rest will go to company’s founder Girish Patel and his family.
Actis picked up an over 60% stake in Paras since 2006 in various tranches and has invested $145 million in the firm, as per a report on its website. Sequoia Capital had invested another $12 million in 2006 in Paras. The firm's revenues have grown by 32% with EBITDA increasing by 51% this year.
Actis has also invested in another Paras Group firm called Sterling Add-Life Medical, which is a hospital chain based in Gujarat.
After the stake buy, Actis also roped in former Dabur International honcho S Raghunandan, who has served a stint with Unilever, as CEO of Paras. The new management and owners also revamped Paras' sales and distribution and launched new products like D'Cold Natural cough syrup with active Haldi and Moov Neck & Shoulder. The firms products are now available in 40 countries and its also eyeing markets like Middle East and North Africa.
Reckitt has brands like Dettol, Disprin, Clearasil, Veet and Durex in the Indian market. It has 25,000 people worldwide, with operations in over 60 countries and sales in almost 200 countries with revenues of over $12.25 billion and net income of $2.24 billion in FY09.
"Paras has been a great example of Actis's ability to create value through a synergistic relationship between the entrepreneur-founder Girish Patel, a private equity investor, and a professional management team led by CEO S Raghunandan. Our Indian consumer insights at Actis have proved to be first class. Reckitt Benckiser is a natural home for the much-loved brands of Paras," said JM Trivedi, Actis Partner and Head of South Asia.
"The acquisition of Paras is another step forward in RB's growth strategy in consumer health care. It creates a material health care business in India, one of the most promising health care markets in the world with the addition of number of strong and leading brands," said Bart Becht, CEO of Reckitt Benckiser.
Reckitt Benckiser was advised by JPMorgan. Actis and the other Paras shareholders were advised by Morgan Stanley.