FMGC major Marico said on Wednesday it had acquired the personal care business of privately held Indian company Paras Pharmaceuticals from UK consumer goods group Reckitt Benckiser.
Financial details of the deal were not disclosed, but Marico said it expected revenue of Rs 150 crore from the acquisition in the fiscal year that ends on March 31.However, a Business Line report pegged the deal at $ 100 million, or Rs 494 crore. Morgan Stanley was the exclusive financial advisor to Reckitt Benckiser on the deal.
Saugata Gupta, chief executive of Marico’s consumer products division, told CNBC-TV18 that the acquisition of Paras Pharma personal care business will provide significant synergies and drive future growth of the company.
Reckitt, which acquired Paras for about $726 million in December 2010, had previously said it wanted to focus on the Indian company’s healthcare business.
As per the deal, the personal care assets will be transferred into a separate company in which Marico will acquire 100% shares. The deal is likely to be completed over next three-four month. That business generates annual revenue of Rs 300 crore to Rs 350 crore, analysts have said.
Paras’s personal care brands include Set Wet hair styling gel, Livon hair conditioner and the Zatak range of deodorants.
Marico said it would fund the purchase through a mix of internal accruals, equity and debt.
“This acquisition gives Marico an opportunity to participate in the rapidly growing deodorant and male grooming categories in India,” the company said in a statement.
Marico said it would use its distribution strength in India to boost the brands and expected the acquisition to reduce its dependence on edible oils and hair oils. Marico’s flagship products include hair oil brand Parachute and edible oil Saffola.
Analysts say Paras Pharma is a good buy for Marico as it would help it expand its portfolio from hair-care to personal care and skin care.
Shares of Marico, which the market values at $2.03 billion, ended up 1.95 percent in a firm Mumbai market.
Watch video:Out of the products Paras deals in, Marico is present in two categories, styling gel and cream and leave in conditioners