Marico buys Paras' personal care brands from Reckitt

Mumbai: Homegrown consumer products company Marico has acquired the personal care portfolio of Paras from British consumer goods maker Reckitt Benckiser. While Marico did not disclose the deal size, analysts estimate the portfolio, which includes brands such as Livon, Set Wet and Zatak, to be valued at Rs 600-700 crore.

Reckitt put the personal care business, likely to close this financial year with sales of Rs 150 crore, on the block soon after it acquired Paras last year. Morgan Stanley was the advisor to Reckitt on the current transaction. So at Rs 600 crore, it will be four times the sales.

In December, Reckitt acquired Paras Pharma’s over-the-counter and personal care portfolio for Rs 3,260 crore, at seven times its then sales.

For Marico, the current acquisition is a “good complement” to its existing business, which includes mainly hair oil brand Parachute and edible oil Saffola. Milind Sarwate, group chief financial officer, Marico, said the acquisition would give it a greater foothold in the male grooming segment apart from personal care. “All the three Paras brands have been growing at a clip of about 20 per cent per annum,” he said, adding: “The acquisition allows Marico to participate in high-growth categories.”

“You can create a category of the future. Operationally, there are great synergies and we can reach out to a global audience with these additional brands. We already have existing brands of our own in these categories, but now, this will boost our value-added portfolio,” said Saugata Gupta, chief executive of Marico’s consumer products business.

By industry estimates, the male grooming category, including pre- and post-shaving products, men’s toiletries, skin care and hair care products, is close to Rs 3,000 crore in size.

The segments of haircare (Set Wet and Livon) and deodorants (Zatak), in particular, are growing at a clip of 25 per cent and are estimated to be Rs 300 crore and Rs 400 crore in size, respectively.

Marico said it would complete the acquisition in two to three months. It would fund the deal using a mix of debt, equity and internal accruals.

Reckitt had said it wanted to focus on the healthcare portfolio of Paras, which has brands such as D'Cold, Krack and Moov, in an effort to drive greater synergies with its existing business.

Globally, Reckitt is focusing hard on healthcare besides household care, a key category for the company. The Rs 2,000-crore Reckitt India derives bulk of its revenues from Dettol, which plays on the health & wellness platform.

Reckitt’s global chief executive, Rakesh Kapoor, is also said to be excited about healthcare, especially in emerging markets, where the potential is substantial.