Mumbai: Fast-moving consumer good firms Emami Ltd and Marico Ltd are interested in acquiring Ahmedabad-based unlisted firm Paras Pharmaceuticals Ltd, officials told Reuters on Thursday.
Paras Pharma, which has over-the-counter and personal care brands such as ‘Moov’, ‘Krack’, ‘D Cold’, ‘Set Wet’ among others, is up for grabs after two private equity firms which hold a majority stake have shown interest in selling their stake for as much as $700 million.
“We are looking for a decent exit and are in talks with a few parties interested in buying us out,” said a top Actis official, who declined to be identified.
“We have appointed a banker and they are looking into it.”
Morgan Stanley is advising Actis and Sequoia on the transaction, he added.
An e-mail sent to Actis’ South Asian business head JM Trivedi remained unanswered. Sequoia officials could not be immediately reached for a comment.
“Actis and Sequoia are interested in selling their stake and once the talks begin we are interested in acquiring a controlling stake,” Harsh Agarwal, Emami group director, told Reuters.
Private equity firms Actis Advisors Pvt Ltd and Sequoia Capital India Advisors Pvt Ltd jointly hold 70% stake in Paras while the rest is held by the promoter.
Earlier on Thursday, the Mint newspaper had reported that Emami is in talks to buy Paras Pharma for Rs4,000 crore, but Agarwal declined to confirm the number.
Officials at Paras Pharma could not be immediately reached for a comment by Reuters.
Personal care products maker Marico Ltd also expressed interest in acquiring the company.
“There is interest from our side certainly, there is no doubt about that. It’s just come out and we are looking at it (Paras) and my assumption is that all FMCGs will be interested,” Chaitanya Deshpande, head of strategy, mergers-acquisitions and investor relations, Marico, said.
Analysts said Paras Pharma will attract attention from companies like Dabur, Emami, Marico while global drugmakers such as Glaxosmithkline, Sanofi Aventis and Abbott Laboratories will also be interested.
“Paras has very well-establised brands in its portfolio and these brand’s penetration levels are still low so it is a very good catch,” said an analyst with Prabhudas Lilladher.
Emami, which manufactures personal care brands such as ‘Fair and Handsome´, ‘Navratna Oil´, ‘Boroplus´ and ‘Sonachandi Chyawanprash´, has been scouting for acquisitions in the personal care space after it acquired Zandu Pharmaceutical Works Ltd in November 2008.
As on 31 March, Emami had cash reserves of Rs604 crore and the firm in June had passed an enabling resolution to raise Rs1,000 crore.
Similarly, Marico and Dabur have been scouting for acquisitions overseas and in India in the personal care space.
“Dabur is definitely in the race as the management had pointed out recently that they will be interested in acquiring Paras Pharma when it came up,” said an analyst with a Mumbai-based brokerage.
Shares of Emami ended down 0.92% at Rs455.25 while Marico shares ended down 0.68% at Rs124.8 in a firm Mumbai market.