Jyothy Labs to buy majority stake in Henkel India

Jyothy Laboratories Ltd, the maker of Ujala fabric whitener, onThursday said it would buy 50.97% stake in consumer goods firm Henkel India Ltd (HIL) from its German parent Henkel AG.

Jyothy had acquired 14.9% stake in HIL from the Indian promoter Tamilnadu Petroproducts Ltd two months ago. Henkel sells personal care and household care brands such as Fa, Henko, Pril and Margo in India.

FMCG companies including Dabur India and Emami Ltd were earlier said to be in the race to acquire Henkel’s India business.
In a deal structured by Mape Advisory Group, Jyothy will acquire 59,360,203 equity shares, constituting 50.97% of HIL at a price of Rs20/share aggregating to Rs118.7 crore.

Jyothy will purchase 68 million preference shares in HIL from Henkel AG for Rs43.9 crore, subject to regulatory approvals, the company said in a statement.

Jyothy will refinance the existing debt of HIL as also buy out the redeemable cumulative preference shares in HIL held by Henkel AG. HIL owes an aggregate debt of around Rs454 crore to its lenders.

MP Ramachandran, chairman and managing director, Jyothy Laboratories, said, “This is a historic and much anticipated move which will help us in strengthening our position in urban India. It will also give us access to any new product launches of Henkel AG in the future.”

HIL is strong in urban India where it gets 70% of its sales with more than 12% sale coming from modern trade, while Jyothy gets 65% of its sales from rural India.

Jyothy and Henkel AG have also agreed that Henkel AG shall have an option to acquire up to 26% of the equity share capital of Jyothy through primary and secondary transactions after a period of five years.

This acquisition will trigger the mandatory 20% open offer to the shareholders of HIL as per applicable Securities and Exchange Board of India Regulations where Mape Advisory Group will be the manager for the public offer.