Financial Daily from THE HINDU group of publications
Friday, May 05, 2006
Corporate - Mergers & Acquisitions
Industry & Economy - Personal Products
Godrej joins other FMCG majors in shopping for cos abroad
New Delhi , May 4
Godrej Consumer Products Ltd (GCPL) is eyeing acquisitions in Far East Asia and Latin America in the hair colour business.
"We have appointed merchant bankers to identify suitable targets and are on the lookout for acquisitions," Mr Hoshedar K. Press, Executive Director of GCPL said.
Though the company has not earmarked funds for the proposed acquisitions, Mr Press said it was prepared to meet the expenditure if it came across any good business proposition.
FMCGs in takeover mode
Apart from Godrej, several Indian FMCG majors are finalising plans for overseas acquisitions. Marico Ltd and Dabur India too in recent months announced plans to acquire FMCG companies overseas.
Marico, in fact, is reportedly conducting due diligence to acquire companies in soap and other related business. According to market sources, the company is also eyeing acquisitions in the "areas of beauty and wellness."
Dabur India is conducting due diligence to acquire a vitamins/supplements company in the US, an FMCG brand in Egypt and an FMCG company in Malaysia, according to market sources.
The company has reportedly earmarked up to Rs 500 crore for these acquisitions. Dabur had earlier this year said that it was looking at inorganic growth opportunities both in India and abroad to grow its revenues.
Meanwhile, this will not be the first overseas brand acquisition for Godrej.
The company previously acquired the Keyline brand in the UK, which gave it access to markets in Europe, Jordan, Australia and Canada, as well as a wide customer base in the UK.
The company had earlier stated that it was likely to acquire other brands in the UK for further growth.
Industry analysts say that such acquisitions allow the domestic companies to gain an easy foothold in the foreign markets.
"The cost of brand building is lower as the consumer is already familiar with the brand," an analyst said.
Analysts further add that after the recent rally in the domestic stock market, valuations of Indian FMCG companies are a bit stretched as compared to overseas firms, making foreign acquisitions a better bet.
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