Mumbai: Consumer goods firm Marico Ltd on Monday announced that its Malaysian unit has acquired hairstyling brand Code 10 from Colgate-Palmolive Co. for an undisclosed sum. The purchase marks Marico’s entry into Malaysia.
“The acquisition gives us an entry into a new market (South-East Asia) and in a category in which we are strong players—hair cream and hair gels,” said Milind Sarwate, chief of finance, human resources and strategy, Marico, in a statement. Until now, Marico’s presence in Malaysia was limited to its flagship hair oil brands, Parachute and Nihar.
“It will have a trigger effect as we now gain access to a new geography and start building our presence there,” he added.
Wider horizon: Marico chairman Harsh Mariwala. The acquisition will allow the company to enter the Malaysian hairstyling market, estimated at 150 million Malaysia ringgits, or around Rs200 crore. Ashesh Shah / Mint
The Malaysian hairstyling market is estimated at 150 million Malaysia ringgits (around Rs200 crore). “Code 10 is the No. 1 player in the country with a 10% market share and revenues of close to Rs12 crore,” Sarwate said in an interview.
“Typically, a company pays 1.5-2 times the revenues of a brand for acquisition, which will make this an acquisition in the range of Rs20-25 crore,” said Anand Shah, a consumer goods analyst with Angel Broking Ltd.
“This is a typical Marico acquisition,” added Abhijeet Kundu, vice-president (research) at Antique Stock Broking Ltd, describing Marico as a conservative company. He predicted more acquisitions by Marico in South-East Asia, including Malaysia, in years to come.
In the past, Marico has made acquisitions in Egypt: in 2006, it bought local haircare brand Fiancee followed by Hair Code in 2007.
Colgate Palmolive, however, will continue to distribute the Code 10 range of hair creams and hair gels for a limited period under a transition services agreement, Sarwate said. “You can’t take over everything overnight. For a period of about six months, Colgate will distribute for us, then we will take it over on our own.”
On the Bombay Stock Exchange, which on Monday extended trading by an hour, Marico’s stock closed 0.589% lower at Rs102.60, while the benchmark Sensex rose 0.54% to close at 17,558.73 points.