Godrej Consumer Looking for Acquisitions Abroad

Monday, March 30, 2009

Godrej Consumer Products Ltd. is looking for acquisitions worth up to $1 billion abroad as the Indian soap and hair color maker wants to sell its products in countries like China, Brazil and Nigeria, Chairman Adi Godrej said.

“We won’t go for anything very tiny, but if the acquisition is over $15 million, we would look at it,” Mr. Godrej told Dow Jones Newswires in a recent interview. “On the upper side, we would look at something up to maybe a billion dollars.”

He said the company would also look at acquisitions in countries like Indonesia, the Philippines, Thailand, Egypt, South Africa, and Mexico. “We would not go into developed countries by and large, and we would not like to go into developing countries with a small population.”

It is targeting companies offering hair color and other hair-care products internationally, Mr. Godrej said. Also, it will look at buying “any good brands or businesses in personal or household care” in India, he added.

Godrej Consumer – whose products include soaps, detergents, deodorants, talcum powder, hair color, shaving cream and diapers – has been making international acquisitions in the past few years.

It acquired Keyline Brands, a U.K.-based provider of personal-care products, in 2005. It also bought two South African firms – hair color company Rapidol in 2006 and hair accessory maker Kinky last year.
Godrej Consumer Products Ltd. is looking for acquisitions worth up to $1 billion abroad as the Indian soap and hair color maker wants to sell its products in countries like China, Brazil and Nigeria, Chairman Adi Godrej said.

“We won’t go for anything very tiny, but if the acquisition is over $15 million, we would look at it,” Mr. Godrej told Dow Jones Newswires in a recent interview. “On the upper side, we would look at something up to maybe a billion dollars.”

He said the company would also look at acquisitions in countries like Indonesia, the Philippines, Thailand, Egypt, South Africa, and Mexico. “We would not go into developed countries by and large, and we would not like to go into developing countries with a small population.”

It is targeting companies offering hair color and other hair-care products internationally, Mr. Godrej said. Also, it will look at buying “any good brands or businesses in personal or household care” in India, he added.

Godrej Consumer – whose products include soaps, detergents, deodorants, talcum powder, hair color, shaving cream and diapers – has been making international acquisitions in the past few years.

It acquired Keyline Brands, a U.K.-based provider of personal-care products, in 2005. It also bought two South African firms – hair color company Rapidol in 2006 and hair accessory maker Kinky last year.

Mr. Godrej said new acquisitions could be funded through debt, equity or both. “If the acquisition is big, we may have to borrow money and use our surpluses.”

Godrej Consumer had already raised 4 billion rupees ($79.2 million) through a rights share issue in the current financial year, primarily to fund possible acquisitions.

“For some of our (Godrej group’s) other businesses, we would look at, for example, household insecticides. That’s a strong business for us and we would look at acquisitions there,” Mr. Godrej said.

The group has interests in real estate, agriculture products, consumer durables and home appliances and gets 25% to 30% of its total revenue from consumer goods.

It sells household insecticides through a joint venture with Sara Lee Corp., confectionery and beverages through a unit with Hershey Co. and poultry products through its venture with Tyson Foods Inc.

Mr. Godrej declined to comment on a recent media report the group is likely to buy out the 51% stake of Sara Lee in their joint venture, Godrej Sara Lee Ltd.

The demand for consumer goods is normal despite the slowing global and Indian economy, Mr. Godrej said.

“The urban consumption in FMCG (fast moving consumer goods) is running very strong. Rural is running even stronger,” he said. “There is no slowdown.”
Mr. Godrej said new acquisitions could be funded through debt, equity or both. “If the acquisition is big, we may have to borrow money and use our surpluses.”

Godrej Consumer had already raised 4 billion rupees ($79.2 million) through a rights share issue in the current financial year, primarily to fund possible acquisitions.

“For some of our (Godrej group’s) other businesses, we would look at, for example, household insecticides. That’s a strong business for us and we would look at acquisitions there,” Mr. Godrej said.

The group has interests in real estate, agriculture products, consumer durables and home appliances and gets 25% to 30% of its total revenue from consumer goods.

It sells household insecticides through a joint venture with Sara Lee Corp., confectionery and beverages through a unit with Hershey Co. and poultry products through its venture with Tyson Foods Inc.

Mr. Godrej declined to comment on a recent media report the group is likely to buy out the 51% stake of Sara Lee in their joint venture, Godrej Sara Lee Ltd.

The demand for consumer goods is normal despite the slowing global and Indian economy, Mr. Godrej said.

“The urban consumption in FMCG (fast moving consumer goods) is running very strong. Rural is running even stronger,” he said. “There is no slowdown.”

Source: Wall Street Journal (link opens in a new window)