Godrej may buy Sara Lee’s Asia biz, stake in JV

Godrej may buy Sara Lee’s Asia biz, stake in JV
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First Published: Sat, Aug 08 2009. 12 46 AM IST

Expanding reach: H.K. Press, vice-chairman of Godrej Consumer Products , says the firm has told US partner Sara Lee Corp. that it finds the latter’s household and body care business in the Far East ‘a
Expanding reach: H.K. Press, vice-chairman of Godrej Consumer Products , says the firm has told US partner Sara Lee Corp. that it finds the latter’s household and body care business in the Far East ‘a
Updated: Sat, Aug 08 2009. 12 46 AM IST
Kolkata: India’s largest consumer goods company, Godrej Consumer Products Ltd (GCPL), has told its US partner Sara Lee Corp. that it is willing to acquire its household and body care business in countries such as Indonesia, Malaysia, Singapore and Thailand, in addition to its 51% stake in the Indian joint venture, Godrej Sara Lee Ltd, according to H.K. Press, vice-chairman of GCPL.
Expanding reach: H.K. Press, vice-chairman of Godrej Consumer Products , says the firm has told US partner Sara Lee Corp. that it finds the latter’s household and body care business in the Far East ‘attractive’. Abhijit Bhatlekar / Mint
Under the home and body care segment, Sara Lee manufactures and sells products such as Kiwi shoe polish, Brylcreem hair cream, Radox body wash, Ambipur air fresheners and GoodKnight insecticides. In some countries, it also sells food products and beverages. In North America, it runs bakeries and sells meat products to retail chains such as Wal-Mart Stores Inc.
On 30 March, Illinois-based Sara Lee had said in a press statement that it was “reviewing strategic options for its international household and body care business after receiving expressions of interest”, including outright sale.
Sara Lee had said in a guidance to investors that revenues from its international home and body care business were expected to be a little above $2 billion (Rs9,580 crore today) in fiscal 2009, which ended in June. The firm is going to announce its financial results for fiscal 2009 on 12 August. “Sara Lee’s household and body care business in the Far East is very attractive…we have conveyed our interest in acquiring it,” Press told Mint.
“Whether Sara Lee’s body care and household business would be a good buy for Godrej or not would depend on the price they pay for it vis-à-vis the size of the business. It is too early to comment,” said Anand Shah, an analyst with Angel Broking Ltd, a Mumbai brokerage firm.
In fiscal 2008, 21% of Sara Lee’s revenues from the home and body care business— around $400 million—came from the Asia-Pacific region, according to a regulatory filing.
Mint couldn’t independently assess the value of the non-India business of Sara Lee that GCPL wants to acquire.
Sara Lee’s press office refused to comment on Godrej’s interest in its home and body care business in the Far East.
GCPL’s interest in Sara Lee’s Asia-Pacific operations is in line with its strategy to grow through acquisitions in markets such as Latin America, China, Africa and West Asia, where it has minimal or no presence, according to Press.
In an interview with CNBC-TV18 television channel on Thursday, Godrej Group chairman Adi Godrej said GCPL was looking to acquire consumer goods firms in India and other developing countries and that to fund buyouts, his company could raise cash by selling shares.
GCPL’s revenue was around Rs1,400 crore in fiscal 2009. The company’s net profit for the year was Rs172.6 crore. In the quarter that ended in June, GCPL’s net sales rose 21% year-on-year to Rs439 crore while its net profit rose 78% to Rs70 crore.
GCPL has offered to acquire Sara Lee’s 51% stake in the Indian joint venture. Godrej Sara Lee ended the year to March with revenue of a little above Rs750 crore.
Recently, GCPL merged into itself two group firms—Godrej Consumer Biz Pvt. Ltd and Godrej Hygiene Care Pvt. Ltd—that held the 49% stake in the joint venture with Sara Lee. GCPL said in a statement that the aim was to strengthen its consumer goods business and to build “scale to pursue growth opportunities”.
While announcing Sara Lee’s strategic decision to exit the home and body care business on 30 March, its chairman and chief executive Brenda C. Barnes had said, “Our household and body care business has very strong brands… In keeping with our commitment to value creation, we will carefully evaluate all opportunities and do what is in the best interest of the company and its stakeholders.”
According to news reports, firms such as Unilever Plc., Reckitt Benckiser Group Plc., SC Johnson and Son Inc. and Colgate-Palmolive Plc. have evinced interest in acquiring Sara Lee’s household and personal care businesses in certain geographies.
If Godrej’s acquisition of Sara Lee businesses in other Asian countries goes through, it will be the second Indian consumer products firm to acquire Asian assets. In 2007, Wipro Ltd acquired Singapore-based Unza Holdings Pte Ltd, a detergent and personal care manufacturer for Rs1,010.2 crore.
aveek.d@livemint.com
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First Published: Sat, Aug 08 2009. 12 46 AM IST