To raise finance for its largest ever acquisition of PT Megasari Makmur Group, Godrej Consumer Products Ltd (GCPL) is taking the debt route. ?We are taking a loan to raise money for our new acquisition in Indonesia. The transaction will be financed by low cost offshore debt,? Adi Godrej, chairman of the Godrej Group told FE. Godrej was reluctant to share the acquisition price of Megasari. Analysts peg the amount to be around Rs 1,100 crore. Prior to acquiring Megasari, GCPL has acquired the personal care brand Tura from Nigeria?s Tura Group on March 12 this year.
According to Godrej, GCPL is taking loans to finance both its recent acquisitions namely Tura and Megashri.?Incidentally, GCPL has pulled off two global acquisitions within 25 days and is still scouting for global acquisitions.? Last year GCPL acquired a 49% stake in Godrej Sara Lee and is looking to buy the remaining stake. Very soon, GCPL will buy the remaining stake too,? said an analyst based in Mumbai. Shares of Godrej Consumer Products rose by 7.67% to touch Rs 298.90 on the Bombay Stock Exchange from its previous close. On the scale of GCPL?s new acquisition, IDFC SSKI Securities Ltd MD Nikhil Vora said, ?This is the largest ever acquisition by GCPL and also one of the largest acquisitions by an Indian FMCG company.
Megasari would add ~25% to GCPL?s revenues and ~15% to GCPL?s profits.? According to Vora, there is a clear operational merit in this acquisition and at the estimated value of $250-300m, the deal would be value accretive.