Dabur sets aside $200 mn for overseas acquisitions

Dabur India Ltd has earmarked $200 million (Rs804 crore) primarily for acquisition of brands and companies abroad as the marketer of Vatika Hair Oil, Dabur Chyawanprash and Babool toothpaste plans to expand its global presence.

“South Africa is a point of focus for us and we are looking at buying a health and personal care company for around $50million there,” said Sunil Duggal, its chief executive. He said in developed markets such as the US, Europe and East Asia, “the ticket size of an acquisition would be around $100 million”.

Dabur has categorized the markets it is looking at into three—focus, potential and new markets. Focus markets are those where it has a presence. In such markets, it plans to acquire smaller brands. In new markets, where it does not have a presence now, Dabur is looking at both medium-and large-sized companies. Its potential markets include Malaysia, the UK, and South Africa, where the company has a minimal presence.

“The buy should work as a two-way deal in which our products can run through the network of the acquired company. Similarly, the products of the acquired companies should be relevant for Indian consumers as well,” he said.

The company had earlier bid for Singapore-based Unza Holdings Ltd, but lost out to Wipro Consumer Care and Lightining Ltd, a part of Wipro Ltd. “Over the last two or three years, we were circumspect because the valuations were very high and acquisitions were difficult to justify. Our next acquisition could be that of a company like Unza, which is a pure personal care multi-brand firm spanning many domains,” he said.

“Mid-sized companies such as Dabur, Marico and Godrej are getting aggressive to acquire companies in countries such as Middle East and Africa. The ethnic population in these countries offers a good potential for their products,” said Unmesh Sharma, an analyst at Macquarie Securities. “These companies will have to make sure that the acquisitions are not too expensive. Otherwise, they will defeat the objective behind expansion.”