Dabur India has acquired 72.15% of Fem Care Pharma Ltd (FCPL), a leading player in the women’s skin care products market, for Rs204 crore in an all-cash deal.
The transaction ascribes a price per share of Rs800, which translates into an equity valuation of Rs282 crore and an enterprise valuation of approximately Rs300 crore for Fem Care Pharma.
Dabur will make an open offer for an additional 20% shares in the Company as required under the takeover regulations.
Fem Care Pharma, which has a leadership position in the fairness bleach category and a strong market position in hair removal and liquid soap category, is best known for its brand Fem.
FCPL, which reported a consolidated net profit of Rs9.8 crore in H1FY09 on a turnover of Rs54.5 crore, also has a sizeable international market presence in markets such as Yemen, Maldives, Mauritius, Malaysia, UAE, Oman, etc.
We believe the acquisition to be a positive move by Dabur, although at a slightly higher cost, as it brings to the company a portfolio of well-known household brands that enjoy a strong positioning in their respective categories, offering Dabur a strong platform to enter into newer product categories and markets.
As with the previous acquisition and subsequent integration of Balsara’s Hygiene and Home products businesses, Fem too would offer substantial synergies for expanding the reach of Fem’s brands in all its geographies as well as better management of overall system costs.
This provides Dabur an entry into the high-growth skin care market with an established brand name Fem with further potential to extend the brand into newer and related skin care categories. We recommend ACCUMULATE rating on Dabur with a target price of Rs80.