Wednesday, April 26, 2006

Acquisition Of Companies and Brands - Fmcg Sector


Hi,

We have seen Mergers and Acquisition in FMCG sector as well as acquisition of lot individual brands. Here are few examples:

1. P&G and Gillette
2. Dabur acquired Balsara for 143 crores
3. Godrej Consumer Care bought Keyline Brands
4. Marico acquired HLL Nihar brand

I have done some research on this topic.

I want the following inputs:
a) Rationale for companies going for acquistions (strategy)
b) Please give more examples of acquisition of companies and brands
c) Do you forsee any future acquisitions in FMCG globally or in India? If yes, what is the rationale behind this?

News on this topic
1. Godrej joins other FMCG majors in shopping for cos abroad
2. Dabur India eyes acquisitions
3. Tata Tea arm to acquire Czech tea co

Please do comment. This question is also available at MarketingProfs and orkut community FMCG Marketers.

6 Comments:

Blogger Nitin Kochhar said...

After posting this question ... the next message i get in my feed reader is - Dabur India eyes acquisitions (http://economictimes.indiatimes.com/articleshow/1505937.cms)

-Dabur is looking acquisitions abroad to boost growth, and expects overseas business to contribute a fifth of revenue in three years.

-Dabur is targeting small or mid-sized brands or businesses in south Asia, the Gulf region, North or West Africa. They have a wish list and have been talking to various parties. They are looking at firms that had annual revenues of about $4-11 mn.

-The company may also look at acquiring a North American brand which has a portfolio of herbal products.

-The company was eyeing targets in the domestic market but they were expensive.

-There are many targets and several synergistic opportunities, but valuations are stretched, perhaps because of the bull run in the stock market. That's why they are looking overseas for more sensible valuations.

-Shares in Dabur, which ended little changed at a provisional 131.60 rupees on Wednesday, have gained 27 per cent this year.

-A political turmoil in Nepal, which led to a blockade, has caused disruptions in the supply of juices from its plant in the Himalayan kingdom and would affect sales in April. But the company expects to make up the lag in May.

-Dabur, which gets about 12 percent of its revenue from abroad, sources about 70 per cent of its juice for its Real and Real Activ brands from Nepal.

-The company expects to double revenues and profits by 2009/10 through expansion, acquisitions and innovation, from 13.7 billion rupees in revenue in 2005/06 and a net profit of 1.9 billion.

- The expansion of formal retail, which makes up about 3 percent of the overall retail market, would help Dabur brands, but also pose challenges.

-They are preparing for the advent of private store labels and higher bargaining power of large stores, but they are also looking at the possibility of lower marketing spends as formal retail grows.

April 26, 2006 8:17 PM  
Blogger Nitin Kochhar said...

1. Dabur’s acquisition of 7 brands from Balsara: DIL's acquisition of the three Balsara group companies will give it access to seven established brands — toothpastes Promise (unique clove oil positioning), Babool (value segment) and Meswak (premium segment), Odonil air freshener, Odopic utensil cleaner, Sanifresh toilet cleaner and Odomos insect repellent. Balsara’s herbal oral care range is a good strategic fit for Dabur, as their products are also positioned on the herbal benefits.

2. Godrej bought Keyline’s Brands: The deal gave GCPL an easier route to enter the skincare segment through Keyline brands such as Endocil, Inecto, Skyhydra and Aapri. So now GCPL is not just soap and hair colour. Its kitty will also include Erasmic shaving products, Cuticura talcum powder, Adorn & Nulon. In past, they had been looking at the Nihar brand of hair oil as it fits into Godrej's portfolio since it is has been marketing the Anoop brand..

3. Marico acquired skincare company Sundari LLC, two aromatic soap brands in Bangladesh and Nihar coconut oil from Hindustan Lever.

4. Wipro Ltd acquired the Chandrika soap brand with long-term lease rights for marketing the product in India and the SAARC region. Chandrika is the second largest selling brand in south India after Medimix. Also this would align with Wipro’s strengths in markets like Andhra Pradesh, where Santoor soap brand is already the market leader with a market share of 17 per cent.

5. P&G's acquisition has give it access to Gillette's portfolio comprising shaving products, Oral-B toothbrushes and Duracell batteries, among others. This has helped P&G to upgrade from household products like soaps, detergents and cleaners, to a company that is into "lifestyle" products in the personal care and grooming segments. Gillette's basket of hi-tech shaving systems for men and women, powered tooth-brushes and male grooming products will complement P&G' clutch of brands in the beauty, personal care and feminine hygiene segments. Gillette will also add more high-margin products to the P&G portfolio, making for more robust profit margins than its rivals and furthering its innovation efforts.

May 01, 2006 5:30 PM  
Blogger Nitin Kochhar said...

Addition to the post:

Tata Tea arm to acquire Czech tea co - check this out - http://economictimes.indiatimes.com/articleshow/1512390.cms

Highlights:

1. The acquisition has been funded by Tetley Group

2. It will continue to pack teas at its production facility at Jemnice in Czech Republic and continue to trade under the 'Jemca' brand name

3. This is a further development to grow the Tata Groups tea business around the world. It gives us a market leading position in an area where tea consumption is high and where they have been previously unrepresented.

4. The experience and skills of Jemca and Tetley complement each other well and will combine to create a significant presence in Eastern Europe

5. Company Vice-Chairman Krishna Kumar said that acquisition of Jemca was important for the Tetley Group for consolidating its presence in eastern Europe

May 04, 2006 8:18 PM  
Blogger Nitin Kochhar said...

Check out one of published article on this topic - "The FMCG sector: Companies and brand acquisitions" - http://202.87.40.145/news/innernews.asp?storyId=4543&lmn=1&cat=4

May 19, 2006 4:10 PM  
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