The company board, which met on Thursday, approved the acquisition of controlling stakes in three Balsara group companies Balsara Hygiene Products, Balsara Home Products and Besta Cosmetics Ltd.
According to Dabur group director Mr PD Narang, the company would be soon seeking shareholders approval for the acquisition following which the boards would be reconstituted. The control will rest with us, he added.
As per the deal, Dabur will take full control of Balsaras entire brand portfolio which consists of oral care brands like Promise, Babool, Meswak; mosquito repellants like Odomos and household products like Odonil, Odopic.
The deal also includes takeover of Balsaras operations consisting of three manufacturing facilities at Kanpur, Silvassa and Baddi and about 600 employees.
The acquisition will also mark Daburs entry into the Rs 2,000-crore household care business through Balsaras brands. According to Mr Duggal, the acquisition will also result in significant cost synergies and economies of scale for the company.
Terming the deal an attractive value proposition, Mr Duggal said that Balsara Group with revenues of Rs 199 crore and consolidated losses of Rs 8 crore did not have the volume scale to be viable in the current environment. Some level of consolidation was bound to happen in the FMCG sector, Mr Duggal added.
Ambit Corporate Finance acted as financial advisors for the deal, while due diligence was done by PricewaterhouseCoopers, AZB & Partners and Accenture.
Meanwhile, the company recorded an increase of 44.7% in its net profit at Rs 43.14 crore for the third quarter ending December 31, 2004, up from Rs 29.81 crore in the third quarter last fiscal. The companys turnover rose by 9.29% to Rs 367.13 crore for the period under consideration as against Rs 335.9 crore in the corresponding period previous fiscal.