Following up on its recent announcement of the acquisition of the Issue Group, Godrej Consumer Products Ltd (GCPL) today announced that it has entered into an agreement to acquire 100% stake in Argencos, a mid-sized Argentine hair care company. The company has a strong portfolio of brands in the hair care space. Roby enjoys market leadership in hair styling sprays while ‘919’ occupies the mid-premium space. The combined sales of the two Argentine transactions would be over 45 mn USD. The equity value for both transactions is approximately 43 mn USD. This transaction makes the combined portfolio a clear market leader by volume in both hair colour and hair styling sprays.
On May 23, 2010 Godrej Consumer Products Ltd (GCPL) announced that it has entered into an agreement to acquire a 100% stake in the hair care company Laboratoria Cuenca, Consell SA, Issue Uruguay and Issue Brazil (collectively referred to as ‘Issue Group’).
Commenting on the acquisition, Adi Godrej, Chairman, GCPL, said: “Argencos is a perfect, complementary add-on to our earlier acquisition of Issue Group. I expect the combination of the two businesses to set us on a firm footing in achieving our plans for Latin America. The two companies provide us with a tremendous platform for establishing a strong presence in the fast growing hair colour markets in Latin America. Argentina and Brazil are leading vanguards of hair trends and innovations in hair care. We will have market leadership in many countries in South America including a presence in Brazil.
The portfolios of the two companies are very complementary in the hair colorant space and they will add to each other’s strengths. We also expect significant synergies across the value chain and a strong thrust for creating a sizeable business in Brazil. Knowledge and exposure to these markets will also help strengthen our technology and product development funnel in India.
At the same time, the acquisition represents another important step towards GCPL becoming a leading emerging markets multinational and dovetails well with our global 3 by 3 strategy – presence in 3 continents – Asia, Africa and Latin America through 3 core categories – home care, personal wash and hair care. Over the last few years, we have been following a very disciplined and focused approach to identifying acquisitions that represent a strong fit with our business, both strategically and operationally”.
Investment thesis
• The hair colorants market in Argentina is estimated to be around US$200mn growing at a CAGR of more than 22% over the last two years
• Argencos is one of the largest player in the kit format in hair colours with an market share of 17% in the format
• It is the No.1 Hair Spray company with its brand ‘Roby’ having immense brand equity in Argentina
• The Godrej hair colour portfolio will now enjoy a volume market share greater than 25% in hair colours and almost 50% in hair styling sprays
• Argencos has a manufacturing plant located in La Rioja which enjoys tax benefits due to its location
• Potential synergies between the two companies are significant
About Godrej Consumer Products Limited
Godrej Consumer Products Ltd (GCPL) is a major player in the Indian FMCG market with leadership in the hair color and fabric care categories. It is also one of the largest marketers of toilet soaps in the country with leading brands, such as Cinthol, Godrej Fairglow and Godrej No.1. GCPL has a 100% stake in Godrej Household Products Limited, which is the market leader in India in the Household Insecticides market with its brands GoodKnight, HIT and JET.
The acquisition of Rapidol and Kinky in South Africa have given GCPL leading positions in the fast growing South African ethnic hair care market. As part of increasing its global footprint, GCPL recently acquired Tura, a leading beauty brand in West Africa, Megasari Group, a leading household care company in Indonesia and Issue Group, a leading hair colorant company in Argentina.
Source: Godrej Consumer Products Limited
