Hindustan Unilever (HUL) is returning to the M&A ring with an interest to acquire Kerala-based ayurvedic hair and skin care brand Indulekha
MCG behemoth Hindustan Unilever (HUL) is returning to the M&A ring with an interest to acquire Kerala-based ayurvedic hair and skin care brand Indulekha, two people directly familiar with the matter said. HUL is in the reckoning after frontrunner private equity groups walked away from deal-making, leaving strategic suitors to consider a Rs 500-crore buyout of Mosons Extractions, makers of Indulekha.
The HUL bid, if successful, could possibly be its first acquisition deal in more than a decade. The Anglo-Dutch MNC's last acquisition was the cooked shrimp and pasteurized crabmeat business of the Amalgam Group of Companies, which was a leader in value-added marine products exports, in 2003. HUL's more significant acquisitions came during the '90s when it acquired Lakme, Kwality, Tomco and Kissan.
Mosons Extractions had mandated investment bank Anand Rathi to run a Rs 600-crore sale process, which attracted bids from private equity fund TPG Growth and others. TPG, which spent considerable time on the deal, is said to have dropped the plan, while others like Carlyle too have gone slow.
"HUL is interested in acquiring Indulekha brand, though at a much softer valuation," said one of the sources cited earlier in the report, adding that the company wouldn't pay more than Rs 500 crore to clinch the deal. But some industry watchers remain skeptical as to why the company would re-enter the hair oil business after selling Nihar brand to Marico in 2006.
Indulekha, however, is a new generation ayurvedic solutions business that could gel with HUL's Ayush services business, which is a relatively small business as compared to the size of its other big brands. The FMCG major has also launched value-added premium specialized hair oils under Dove.
An HUL spokesperson declined to comment on speculation. Anand Rathi too declined to comment, while Mosons Extractions could not be reached immediately.
The Mosons Group, based in Thalassery, a small northern Kerala town, positioned Indulekha - which sells hair oils, skin creams, face packs and soaps - in a premium price bracket leveraging on ayurveda and some deftly packaged marketing. Godrej Consumer Products, Bajaj and Emami too have looked at the transaction. The hair care market revved up with deal activity earlier this month when Emami acquired Kesh King brand from SBS Biotech for Rs 1,651 crore, sealing one of the largest FMCG deals in recent years.
HUL has been cautious on deal-making after the troubled takeover of Modern Foods through a government disinvestment programme in the year 2000. Over the last 12 years, however, HUL has been on a drive to remain focused on its core business of personal products, which include skin care, hair care, soaps and detergents, deodorants, colour cosmetics, foods and beverages and water purifiers. In the process, the company exited some non-core businesses like vanaspathi by selling Dalda to Bunge India in 2003.
HUL's net revenue last fiscal came at Rs 31,000 crore, while reserves and surplus stood at Rs 3,508 crore as of March 31, 2015.
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