After months of pursuing PT Megasari Mamsur, the Indonesian household product maker, Godrej Consumer Products Ltd on Tuesday announced it has sealed the deal to acquire Megasari, as well as its distribution arm, PT Intrasari Raya. The deal is valued at around Rs 1,000-Rs 1,200 crore, according to analysts.
The Rs 600-crore Megasari manufactures household insecticides, wet tissues and air fresheners under the brand names Hit, Mitu and Stella respectively. The deal will be financed through a mix of internal accruals and debt.
This is the fifth acquisition for GCPL. Last month, it entered into an agreement to acquire Nigerian beauty brand Tura for an estimated Rs 400-500 crore. The company had earlier acquired Keyline in the UK, and two companies in South Africa, Rapidol and Kinky, which are in the haircare products space.
"As an emerging market multinational, this acquisition is an important step in our global 3 by 3 strategy -- presence in the three continents Asia, Africa and Latin America through 3 core categories -- home care, personal wash and hair care," said Adi Godrej, chairman, GCPL, on the Megasari acquisition.
Household insecticides contribute about half of Megasari's turnover with the balance coming from air fresheners and wet wipes.
"There is clearly a fit there with our business," says A Mahendran, director of the FMCG portfolio cell at Godrej.
Godrej Sara Lee, in which GCPL has a 49 percent stake, manufactures household insecticides Hit and Jet as well as mosquito repellent Good Knight. Its aircare business is represented by AmbiPure, while it has allied products as Brylcreem and Snuggies.
"We will first focus on integration of Megasari with GCPL, then look to push our products through the former's distribution network," said Mahendran, adding that the acqusition would allow GCPL to service adjoining markets in the region including Vietnam, Malaysia, the Phillippines and China.
GCPL has already received a board okay to raise funds upto Rs 3,000 crore recently. "So we don't see a problem in financing the transaction," Mahendran said.
The senior management at Megasari will be retained, though a Godrej group resource -- Naveen Gupta -- will move to Indonesia as business head. He will report to Mahendran.
For mid-tier FMCG companies such as GCPL, acquisitions have become the preferred route to increase both turnover as well as market presence quickly.
"Over the last few years, we have been following a very disciplined and focused approach to identifying acquisitions that represent a strong fit with our business, both strategically and operationally. We have also developed strong processes to manage and integrate these acquisitions. We look forward to working with the Megasari team to take the company to the next level along with creating a platform for other Godrej products in Indonesia," Godrej added.