Business OpportunitiesGodrej may buy some Sara Lee International assets
Godrej Consumer Products Ltd, India’s second-biggest soap maker, may acquire some of Sara Lee Corp’s international businesses, including the US company’s stake in its Indian joint venture.
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Godrej Consumer may acquire Sara Lee’s stake in the companies’ venture as well as “bits and pieces” of the Downers Grove, Illinois-based company’s global assets, Hoshedar Press, vice chairman of the Indian company, said in an interview. “If Sara Lee manages to find a buyer globally, we will certainly want to buy out their local business,” he said.
Sara Lee, which owns 51 per cent in the venture with Godrej Consumer, may sell its Utrecht, the Netherlands-based international household and body-care unit that sells items such as Ambi Pur air-fresheners and Brylcreem hair products. The Indian household goods maker has told Sara Lee that it will exercise its right to buy out its partner’s stake in the local venture, should the maker of frozen cakes sell its global businesses, Press said.
“Some Sara Lee products such as Brylcreem have a reasonably high brand recall in India and it may be attractive for Godrej to acquire regional rights for these brands as it expands in other developing markets,” said Abhijeet Kundu, an analyst at Antique Stock Broking Ltd who recommends buying the company’s stock.
Godrej rose 4.9 per cent to Rs 219.8, the biggest gain in more than two weeks, in Mumbai trading. The stock has climbed 58 per cent this year, compared with a 61 per cent gain for the Bombay Stock Exchange’s benchmark Sensex.
Godrej Consumer, based in Mumbai, is also looking to purchase other companies valued at as much as Rs 1,000 crore, Press said from Mumbai by phone on August 11. “We have some dedicated resources in the Godrej Group that are looking for acquisitions,” he said.
Good Knight mosquito repellent and other household insecticide products account for the bulk of the revenue of Godrej Sara Lee Ltd. The venture also sells Ambi Pur, Kiwi shoe polish and Brylcreem in India. Godrej Sara Lee’s household insecticide products account for about a third of the Indian market, according to the company. The mosquito repellent brand is owned by the joint venture.
Sara Lee will have to compensate the joint venture if it plans to withdraw the global brands such as Ambi Pur and Kiwi from the Indian market as part of the sale of the international business.
Press declined to say how much the joint venture is worth, adding that the agreement between the two sides has laid out guidelines on how to value the company should the partnership break up.