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ShareBangalore: Wipro Ltd, the soaps-to-IT services giant, has acquired the assets of Yardley, the British cosmetics brand, in Asia, Middle East, Australasia and certain African markets from the UK-based Lornamead group for $45.5 million.
Wipro will have the right to make and sell the premium perfumes and floral bath luxuries in these markets, including India, which have revenues of $24 million and growing at 20% annually, Vineet Agrawal, president, Wipro Consumer Care and Lighting Division, said.
Lornamead, which had acquired Yardley from Procter & Gamble in 2005, will continue to have the ownership of the business in Europe and Americas.
Wipro's flagship brand in India, Santoor, is among the country's top four soap brands, rubbing shoulders with Hindustan Unilever's Lifebuoy and Lux, and Reckitt Benckiser's Dettol. For the year ending March 2009, the division had reported sales of Rs 2,000 crore plus.
"We wanted to acquire the brand for quite some time and had missed it in 2005," Agrawal said, adding the transaction is expected to be completed by mid-December and revenues would start flowing in from the March quarter.
This is the fifth acquisition by the division with the most recent being the $246 million buy of Singapore-based FMCG major Unza in 2007. The Yardley acquisition, which would be funded through internal accruals, is both margin and revenue accretive, Agrawal said when asked if the twice the sales consideration was not on the higher side.
Current deals are going at 2.5 to three times the sales and in that context it is not expensive, he said.
"The consumer care unit contributes roughly 9% of the revenues of the group with a margin of 12-13% in its business. We expect the new business to add at least 1% to the margins," Agrawal said.Nearly 70% of Yardley's sales in the regions bought over from Lornamead come from the Middle East while India contributes 20%, Agrawal said.
Along with higher margins the new brand will also double Wipro Consumer's Middle East business to $30 million, Dipak Kumar Bohra, general manager, finance, said.While the base in India is still small, the business has been growing at 100% plus, he said. With the acquisition, Wipro will push deodorants into the market to attract the younger generation to the Yardley brand, Agrawal said.
