Marico enters Egypt, Acquires Hair Care Brand "Fiancee"

Marico Ltd has announced that the Marico Group (Marico) on September 13, 2006 announced its entry into the Rs 170 crore (USD 38 Million) hair-care market in Egypt through the brand Fiancee, hitherto owned by the Egypt-based Ready Group. The deal, for an undisclosed consideration, envisages acquisition of the brand by Marico as also direct investment in Egypt and a non-compete.

The Fiancee range includes value-for-money hair creams and hair gels. Fiancee is a market leader and commands a share of about 20% of the Egyptian Pound 215 million hair care market. The brand is a market leader in key segments such as gels and gel creams. Marico's acquisition gives it access to the manufacturing and sales infrastructure for the brand, nurtured by the Ready Group over the past 15 years or so.

Speaking on the occasion, Mr. Harsh Mariwala, the Marico Group Chairman stated: "This footprint in Egypt will help us widen our strides in the International hair care market". Mr. Sayed El Ready, Chairman of the Ready Group, expressed confidence that Marico, with its expertise in the hair care segment, would make a big success of the Fiancee brand.

Marico's international business turnover during FY 2006 was Rs 117 crore - about 10% of the Group’s revenue. This acquisition is expected to provide a fillip to Marico's international operations, in a new direction.

Mr. Milind Sarwate, Chief Financial Officer, Marico Group stated: "This acquisition, our 5th in 18 months, would accelerate our shareholder value enhancement efforts. Also, the diversity which Fiancee brings to our portfolio would help us moderate the share of our flagships in both turnover and profits."

The consideration for the deal will be paid out over the next 6 months in two tranches, based on the brand’s performance. Marico, using a short-term loan facility, has already paid one out. Marico would now take a fresh look at its financing pattern and would modulate the debt and equity mix suitably. The shareholders of Marico Ltd already approved a financing plan that envisaged funds upto Rs 500 crore being raised by way of debt and / or equity. The Company has clarified that there is, as yet, no formal proposal before the board.

Ernst & Young India advised Marico on this transaction. The Ready Group was advised by HC Securities & Investment, Cairo, Egypt.

Source : Equity Bulls

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