By Kala Vijayraghavan & Sagar Malviya
Mumbai-based consumer products Anchor Healthcare has had several rounds of discussions with the Kolkata-headquartered Emami to sell its oral care business, top officials close to the development said.
Kotak Mahindra, the investment banker to the deal had also approached other personal care companies such as Godrej, Dabur and Marico for a potential transaction, added the officials.
However, interest in Anchor’s only other brand outside of oral care, Dyna soap, was lacklustre, with buyers more interested in Anchor White toothpaste, Anchor Gel as well as a toothpowder and toothbrushes. When contacted, Atul Shah, promoter of Anchor, denied any sale plans. However, a senior executive at a domestic investment bank confirmed that the company has been sounding off various buyers.
In early 2011, Business Standard had reported that the Shahs had plans to sell the entire consumer products business, lock, stock and Dyna. However, a banker privy to the proceedings pointed out that valuations of the business may have deterred the promoter family from selling in single transaction.
The Shahs are expecting over Rs1,000 crore for the consumer business, added the banker. The company is estimated to have closed the year ended March 2012 with sales of Rs450-500 crore, said a research analyst covering the fast-moving consumer goods sector.
Emami, for its part, has created a war-chest to fund acquisitions. In 2010, the board of the cosmetics and toiletries marketer had approved plans to raise long-term resources up to Rs2,000 crore through the issue of securities as well as to double the borrowing limit to Rs3,000 crore primarily to fund potential buys.
In 2008, Emami had acquired Zandu Pharmaceuticals, but subsequently hasn’t had much luck with buyout attempts. Last year it lost out to Reckitt Benckiser in the race to buy Paras’ personal care business that includes brands such as Livon, Borosoft and SetWet. Early this year, Reckitt sold some of Paras’ personal brands to Marico in a deal that Emami too was keen on.
“Emami will continue to explore avenues for inorganic growth, but we do not wish to comment on any speculations,” said NH Bhansali, CEO, finance, strategy & business development, Emami.
In 1997, Anchor challenged multinational giants like Colgate and Hindustan Unilever by finding a unique proposition in a tough-to-differentiate category by launching a ‘vegetarian’ toothpaste. In the initial years, Anchor managed to grab a market share of close to 10 per cent in a highly-competitive market.
In 2007, the Anchor group had sold an 80 per cent stake in the business of electricals to Japan’s Matsushita Electric Works – owners of the National and Panasonic brands – for Rs2,000 crore. Personal care became the family’s focus area. Soon after the sale of Anchor Electricals, the group bought Forhans, one of the country’s oldest toothpaste brands, from John Oak Remedies. However, the Shahs didn’t make much headway with Forhans, which does not figure amongst Anchor Healthcare’s brands on its website.
Source: The Economic Times
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