Mumbai: Consumer goods maker Godrej Consumer Products Ltd (GCPL) has acquired the $120-million Indonesian insecticides and personal care products firm PT Megasari Makmur Group and its distribution company.
Announced on Tuesday, the acquisition will add to GCPL’s portfolio of insecticides and personal care products, which already includes brands such as Snuggy, Goodknight and Hit, marketed through its joint venture with the US-based Sara Lee Corp.
Focused approach: Adi Godrej, chairman of Godrej Group. Abhijit Bhatlekar/Mint
Hongkong and Shanghai Banking Corp. Ltd was the adviser for the transaction.
“GCPL has paid two to two-and-a-half times for the company at $240-$280 million,” an analyst said, quoting market reports. He spoke on condition of anonymity.
The buyout comes less than a month after GCPL announced purchasing Nigeria-based personal care products firm Tura. In the past two years, it has also acquired Rapidol and Kinky in South Africa.
GCPL has said it has also placed a bid for acquiring a 51% stake in Sara Lee.
“This (Megasari) acquisition is an important step in our global 3-by-3 strategy: Presence in three continents, Asia, Africa and Latin America, through three core categories, home care, personal wash and haircare,” chairman Adi Godrej said in a statement. “Over the last few years, we have been following a very disciplined and focused approach to identifying acquisitions that represent a strong fit with our business, both strategically and operationally. We have also developed strong processes to manage and integrate these acquisitions.”
With the latest acquisition, the group also expects its international revenues to go up by three times in the next financial year.
“Our international revenues are currently 10% of our overall revenues and by next fiscal this will be 30%,” A. Mahendran, director of fast-moving consumer goods (FMCG) portfolio cell for the Godrej Group, told Mint.
“We will pay for the acquisition partially through debts and internal accruals,” Mahendran said.
Last year, GCPL had received board approval to raise Rs3,000 crore to fund expansion plans.
“Mid-sized Indian FMCG companies are doing well by catering to the large middle-of-the-pyramid population of India,” said Debashish Mukherjee, principal consultant at AT Kearney India.
“These acquisitions in emerging economies show a confidence to be able to leverage their expertise and look at synergies for growing faster through inorganic growth,” he said.
Shares of the firm rose 2.2%, or Rs5.95, to Rs277.6 on a day the Bombay Stock Exchange’s Sensex index was little changed at 17,941.37 points.