Godrej to acquire 100 pct stake in Issue Group

Godrej Consumer Products said it would acquire 100 per cent stake in the Latin American Issue Group.

Continuing its string of acquisitions,Adi Godrej-led Godrej Consumer Products on Sunday said it would acquire 100 per cent stake in the Latin American Issue Group,a market leader in hair colour in Argentina,Peru,Uruguay and Paraguay.

The Indian FMCG major had recently acquired Nigeria’s Tura soap brand and Indonesia’s household care company,the Megasari group. Besides,it has also acquired Sara Lee’s 51 per cent stake in its joint venture Godrej Sara Lee.

“The Issue Group (acquisition) provides us the perfect platform for establishing a strong presence in the fast-growing hair-colour markets of Latin America,” GCPL Chairman Adi Godrej said here on Sunday.

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Asked if there were plans for more acquisitions going forward,the Godrej Group Chairman said,”Yes,there could be one or two more acquisitions soon. We are looking at companies in the home care,personal wash and haircare segments.”

He,however,did not disclose the acquisition cost except to say that it would be in the range of “eight times the EBITDA of the company (Issue Group).”

The Issue Group enjoys a leadership position in the Argentina hair-colour market and is a leader in the segment in Peru,Uruguay and Paraguay,with an emerging presence in Brazil.

In Argentina,the Issue brand enjoys volume leadership with a market share in excess of 20 per cent and the business had revenues of over USD 33 million in 2009.

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“We hope to use the strengths of the offerings of the company and our own innovation funnel to create a sizeable business in hair-colours in Brazil. Knowledge and exposure to these markets will also help strengthen our technology and product development funnel in India,” Godrej said.

The transaction is expected to be completed by early-June,he said.

The hair-colourants market in Argentina is estimated to be around USD 200 million and growing at a CAGR of more than 22 per cent in the last two years and the Godrej group intends to exploit this business opportunity through this acquisition.

The Issue Group acquisition is a part of GCPL’s global 3-by-3 strategy,whereby it plans to target strong regional brands in the emerging world (Asia,Africa and Latin America).

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“Any acquisition we do,we will ensure that it has a strong fit with our business,both strategically and operationally,” Godrej said.

This acquisition will also provide the Godrej group with a self-sustaining platform for GCPL’s portfolio of products,hair-colour and household insecticides,throughout Latin America,he said.