Emami Acquires Dermicool from Reckitt for Rs 432 crore

The Dermicool acquisition will be one of Emami's biggest acquisitions after 'Kesh King' brand of hair and scalp products in 2015 and Zandu Pharmaceuticals in 2008.
Emami Acquires Dermicool from Reckitt for Rs 432 crore

Emami has acquired Dermicool, one of the leading brands in the prickly heat powder and cool talc segment, from Reckitt for a total consideration of Rs 432 crore (excluding taxes and duties). The acquisition will be funded through internal accruals and is subject to customary closing conditions. The Dermicool acquisition will be one of Emami’s biggest acquisitions after ‘Kesh King’ brand of hair and scalp products in 2015 and Zandu Pharmaceuticals in 2008.

Dermicool has a 20 percent market share in the high growth and low penetrated category, according to the fast-moving consumer goods company. Combined with Emami’s Navratna Cool Talc, Emami will become a leader in this niche category which would also help realize synergetic benefits and optimize costs.

Harsha V Agarwal, Director, Emami, said, “The acquisition of Dermicool offers great synergy with existing businesses and is a perfect strategic fit. It will strengthen our presence to make us #1 in the prickly heat powder and cool talc category. With increasing global warming and soaring summer temperatures, such problem solution niche products are poised for strong growth in the future.”

In the statement, the company said that Emami, as one of its core business strategies, has always been open to growth through the inorganic route. The company considers acquisitions that not only add value and have synergy with the current line of businesses but also offer opportunities for the organization to be present in categories that have high growth potential.

The prickly heat powder and cool talc segment are pegged at Rs 700-800 crore. “There is a huge potential to grow in Dermicool. For the first couple of years, we may consolidate our position and in the meanwhile, we will work on product extensions under the brand,” Agarwal stated.

According to Abneesh Roy of Edelweiss Securities, Emami’s market share now moves to 45 percent from 25 percent as Dermicool has a 20 percent market share.

Emami has also been investing in D2C brands. Agarwal said that D2C brands have a different target audience and are into very different categories. “We are looking for good opportunities in D2C as well as traditional brands,” Agarwal added.

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