The Delhi-based consumer products firm Dabur will soon acquire a personal care company in the US.
The Rs 34,150-million (Rs 3,415-crore) firm is in advanced negotiations with the US company, and is likely to close the deal shortly, persons familiar with the development told Business Standard.
The name of the company, however, could not be ascertained immediately. The deal size is in the region of Rs 5,000 million (Rs 500 crore).
Dabur, above all, will get access to new markets besides the US, persons in the know said.
When contacted, Sunil Duggal, chief executive officer, Dabur India, said he was not in a position to comment on the company's future plans.
The acquisition, when it fructifies, will be the second one for Dabur this financial year after the buyout of Turkish firm, Hobi Kozmetik, in July. Also a personal care products company, Hobi was acquired for Rs 3,240 million (Rs 324 crore) by Dabur's overseas subsidiary, Dabur International.
Though regarded as expensive by analysts, the Hobi buy gave Dabur much-needed access to the Turkish market. At the time of announcing the buyout, Dabur chairman, Anand Burman had said, "The acquisition is an important step towards consolidating our already substantial presence in the Middle East and North African region."
Dabur is funding the Hobi buy through offshore debt - a tactic it will use for all other international acquisitions too. Indian buys, in contrast, will be funded first by internal accruals, and then borrowings, a company official said on condition of anonymity.
The company, for the record, had sought an approval from its board in July this year to raise up to Rs 2,000 crore (Rs 20 billion) to fund acquisitions. The approval was eventually received from the board.
According to the company's 2009-10 annual report, its cash and bank balances were Rs 19,231 million (Rs 192.31 crore), while its secured loans were Rs 700 million (Rs 70 crore), and unsecured loans were Rs 1,090 (Rs 109 crore). Its debt-equity ratio for the period was 0.19. "There is definitely room for leverage," Shirish Pardeshi, senior fast moving consumer goods (FMCG) analyst at brokerage Anand Rathi, said.
Dabur, according to the company official, will continue to look for opportunities in personal care and healthcare, post the acquisition of the US firm.
