Jyothy Laboratories to acquire 50.97% stake in Consumer Goods Firm Henkel India

The maker of Ujala fabric whitener, Jyothy Laboratories Ltd, announced on 5 May 2011 its decision to acquire 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 in March 2011. Henkel sells personal care and household care brands such as Fa, Henko, Pril and Margo in India.

In a deal structured by Mape Advisory Group, Jyothy will acquire 59360203 equity shares, constituting 50.97% of HIL at a price of Rs20/share aggregating to Rs 118.7 crore. Jyothy will then refinance the existing debt of HIL and 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. Jyothy and Henkel AG 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.

FMCG companies including Dabur India and Emami Ltd were also in the race to acquire Henkel’s India business.

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.

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.