In its largest-ever acquisition, FMCG major Godrej Consumer Products Ltd (GCPL) said it has entered into an agreement to acquire PT Megasari Makmur Group and its distribution company in Indonesia. While the deal size has not been disclosed, industry analysts peg the amount anywhere between Rs 950 croreand Rs 1,100 crore.
Just last month, GCPL had acquired the personal care brand Tura from Nigeria’s Tura Group. With an annual turnover of Rs 550 crore, the Megasari Group manufactures and distributes a wide range of household products including household insecticides, wet tissues and air fresheners in Indonesia.
When contacted by FE, GCPL chairman Adi Godrej said: “After this acquisition, we will continue to scout for global acquisitions in hair colour and household insecticides segments.” On the rationale behind GCPL’s new acquisition, Godrej said the Megasari Group provides the company a strong platform to establish a significant foothold in Indonesia, which is among the largest consumer markets in Asia “We look forward to working with the Megasari team to take the company to the next level along with creating a platform for other Godrej products in Indonesia,” he added.
In October 2005, GCPL had acquired Keyline, in the UK, for approximately 13 million pounds at a valuation of approximately one time the company’s revenues. The Rapidol deal was struck in September 2005 at around Rs 50 crore, again at a valuation of around one time sales. However, the buyout of the Kinky group in April 2008, at around $34 million, was somewhat more expensive and valued at over three times revenues. Last year GCPL acquired a 49% stake in Godrej Sara Lee and is looking to buy the remaining stake. GCPL’s balance sheet is in fairly good shape and after the recent rights issue, the company, according to Edelweiss, has cash to the tune of Rs 400 crore which is a war chest for acquisitions.
According to Godrej, over the last few years, GCPL has been following a disciplined and focused approach to identifying acquisitions that represent a strong fit with its business, both strategically and operationally.” This acquisition is an important step in our global 3 by 3 strategy – presence in 3 continents – Asia, Africa and Latin America through 3 core categories – home care, personal wash and hair care,” he explained.
A Mahendran, director, FMCG Portfolio Cell for the Godrej Group said GCPL’s new acquisition enables GCPL j to leverage its strengths in the Insecticides and aircare market in Indonesia. “Working with the Megasari team, we will strive to further accelerate growth and leverage synergies between Megasari Group and the Godrej Group,” he said.