Marico picks up Paras personal care brands from Reckitt Benckiser

16 Feb,2012

By A Correspondent


Marico has bought the personal care business of Paras Pharmaceuticals from UK consumer goods giant Reckitt Benckiser, edging out Emami. While announcing the deal, both Marico and Reckitt Benckiser declined to disclose the financial details.


But two industry officials familiar with the negotiations said the maker of Parachute Hair Oil has paid Rs600-650 crore for the privately-held Paras Pharma’s personal care brands such as Zatak deodorant, Set Wet hair gel and Livon hair serum. This is much lower than Reckitt Benckiser’s original demand of Rs900 crore, they said.


Morgan Stanley was the exclusive financial advisor to Reckitt Benckiser on the deal.


Marico CMD Harsh Mariwala said the deal will help the company target the youth who now drives demand in the country’s consumer space. “All these brands are youth-oriented, fast growing and have low penetration,” said Mr Mariwala


The transaction will involve demerging the personal care business of Paras Pharma into a separate company, Halite Personal Care India, in which Marico will acquire 100 per cent stake. This will involve transfer of all key assets, including intellectual property rights, supply agreements and third-party manufacturing agreements.


Marico will fund the acquisition through a mix of internal accruals, equity and debt.


Reckitt Benckiser acquired Paras Pharma in December 2010 for Rs3,260 crore, in one of the biggest acquisitions in the Indian consumer goods sector.


The maker of Dettol Anti-septic and Disprin pain killer was more interested in Paras’ healthcare products such as Moov pain-relief ointment and Krack heel care lotion, and decided to sell the personal care business. Financial analysts say it is a good buy for Marico.


“The acquisition will help Marico to move from a dominant hair-care portfolio to skin-care and personal care, which is a bigger opportunity,” said Shirish Pardeshi, executive director and research co-head at Anand Rathi Securities. Marico’s key products in India include hair oil Parachute and edible oil Saffola.


With the new deal, it will get six brands – Set Wet, Livon, Zatak, Eclipse, Recova and Dr Lips – expected to have a turnover of more than Rs 150 crore in FY12. Paras brands are among the top three in the hair gel, male deodorant and hair serum categories.


According to industry estimates, the deodorant category is growing at a rate of 40 per cent a year, hair styling gel at 25 per cent and hair serum at 30 per cent.


Marico CEO (consumer products business) Saugata Gupta said the integration will be easy since the company has domain knowledge in the acquired categories through its operations in Vietnam and the Middle East.


Source:The Economic Times

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