Dabur acquires 72% in Fem Care Pharma

MUMBAI: Dabur India on Friday acquired a 72.15% stake in Fem Care Pharma for Rs 203.7 crore in an all-cash deal in its bid to aggressively enter the skincare market in the country.

It will make an open offer for an additional 20% stake in Fem Care as required under takeover regulations.

“We will fund the entire acquisition from internal accruals … we have around Rs 250 crore of cash,” Sunil Duggal, chief executive officer, Dabur India, told DNA Money, adding the transaction would be accretive to the balance sheet next fiscal onwards.
Fem Care is expecting revenue of Rs 100 crore for the current fiscal and Dabur would absorb its complete workforce.

While overall outlook on the deal is positive, analysts said the acquisition price was a bit on the higher side.

“The deal may be slightly EPS (earnings per share) dilutive as the price looks slightly steep,” said an analyst at a foreign brokerage.

Dabur CEO Sunil Duggal said, “As with our previous acquisition and subsequent integration of Balsara’s hygiene and home products businesses, the Fem Care Pharma Ltd transaction too would offer substantial synergies for expanding the reach of Fem’s brands in all our geographies as well as better management of overall system costs.”

According to Sunita Ramnathkar, joint managing director of Fem Care Pharma, through this deal, the strengths of Dabur will help expand the distribution of Fem’s brands across the country.

According to a company official, Dabur pipped Hindustan Unilever and Marico to acquire Fem Care by offering a higher price.

It priced the deal at Rs 800  per share, valuing the company’s equity at Rs 282 crore, and its enterprise value at around Rs 300 crore.

However, analysts said there were other likely benefits that may eventually help make up for the higher price, such as tax sops from Fem Care’s unit in Himachal Pradesh, and its market leadership position in skin bleach segment.

“The company (Dabur) does not currently have a huge presence in skincare except for brands like Gulabari range and Vatika face packs. This will automatically enhance the company’s presence in this area,” Anand Shah, analyst from Angel Broking, said.
Dabur shares ended down 0.6% at Rs 74.80 while Fem Care Pharma closed up 2.04% at Rs 656.50. With NW18