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Business News/ Companies / Godrej grows haircare biz with Argencos buy
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Godrej grows haircare biz with Argencos buy

Godrej grows haircare biz with Argencos buy

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Mumbai: Personal care products maker Godrej Consumer Products Ltd said late on Tuesday it has acquired Argentina-based hair care firm Argencos SA, its second acquisition in Latin America in less than two weeks.

On 23 May, Godrej had acquired the Issue Group, a market leader in the Latin American hair colour market.

“Latin America is a very large market for haircare products. If you take both the acquisitions together we will become leaders in the haircare market in four countries-Argentina, Uruguay, Paraguay and Peru," chairman Adi Godrej told Reuters.

“The buys are highly accretive to our company in the first year itself," he added.

The firm, which now plans to take powder hair colours from India to Latin America, estimates the hair colorants market in Argentina at around $200 million.

“It is growing at a compound annual growth rate of of more than 22% over the last two years," Godrej said.

The firm will complete the acquisition of Argencos by the end of this month or early next month, Godrej said.

The combined sales of the two acquisitions is estimated to be over $45 million, with the equity value of both the purchases being an approximate $43 million, the firm said.

The revenue mix in FY11 after all the buys will be approximately 35% from the household care segment, 25-30% from soaps, 10-15% from hair colour and the rest from other personal care products, Godrej said.

“Argencos is a good pick in the Argentinian hair care market," said an analyst with Prabhudas Lilladher, adding that most of the Godrej’s acquisitions have been accretive in the first year itself.

Still on the Lookout

Godrej has been on an aggressive acquisition spree in a bid to have its presence in hair colour, insecticides and soap businesses in Asia, Africa and Latin America.

Godrej recently acquired the balance 51% stake in its joint venture with Sara Lee Corp Godrej Sara Lee, which is now renamed as Godrej Household Products Ltd.

Following this acquisition, household products now accounts for a lion’s share of the company’s revenue, overtaking the soaps segment.

It also acquired Nigerian personal care company Tura and Indonesian household care company Megasari earlier this year.

The company’s board in December 2009 had given approval to raise up to 30 billion rupees in debt and equity to fund mergers and acquisitions.

Godrej had earlier told Reuters, his company would raise a total equity of Rs600-700 crore via qualified institutional placement or private equity or both and the rest will be raised through debt.

“Even after these buys we will still have some funds available because we have a lot of cash on the books of Godrej Consumer and Godrej Household Products Ltd...which will be utilised for further acquisitions.",“ he said on Thursday.

At 11.43 a.m., shares of the firm were up 2.57% at Rs335.65, after rising more than 7% to the day’s high of Rs352 in early deals in a firm Mumbai market.

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Published: 03 Jun 2010, 12:26 PM IST
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