Friday, May 4, 2007

Godrej Sara Lee may take over Sara Lee business in India

Godrej Sara Lee, the joint venture company between the Godrej Group and US-based Sara Lee Corporation, is in discussions to take over Sara Lee’s independent business unit in India. While Sara Lee has a 51 per cent stake in Godrej Sara Lee (GSL), a household product company, it also has an independent unit, Sara Lee Household and Body Care India, which is headquartered in Chennai. The independent unit markets brands like Kiwi shoe polish, drain cleaner Kiwi Dranex and hair care brand Brylcreem in India. It is believed that the business and operations of Sara Lee Household and Body Care will be transferred to GSL. Sources familiar with the discussions said the size of the transaction is estimated to be in the range of Rs 100 crore. At present, Godrej Sara Lee’s portfolio largely consists of household insecticide brands like Hit and Good Knight in India, apart from Sara Lee’s air purifier brand, Ambi Pur. Industry sources said Sara Lee was keen on moving all its brands to one company to better manage its portfolio in India.

Wockhardt will pay $265 million (Rs 1,090 crore) in cash to acquire Negma Laboratories

Wockhardt will pay $265 million (Rs 1,090 crore) in cash to acquire a research-based French pharmaceutical company,Negma Laboratories. This means a valuation of 1.8 times the sales and 9.7 times the EBIDTA. While the valuation seems reasonable, if measured against revenues, it is relatively high when one looks at the EBIDTA multiple. Wockhardt will fund the acquisition through internal accruals and debt; it has about $250 million on its books as cash. But more importantly, the acquisition gives Wockhardt a portfolio of patented products.
The management expects the takeover to reflect in its performance from the third quarter. Indian pharma companies are vying for a global presence in the branded generic drug space. Dr Reddy’s had recently acquired German generic drug maker Betapharm.
Earlier, Wockhardt acquired companies in the UK (Wallis and CP Pharmaceuticals), Germany (Esparma) and Ireland (Pinewood Labs). With this acquisition in France, the company effectively covers the whole of Europe. This acquisition helps the company get a strong foothold in the French generic market, which is valued at about $2 billion.
With this acquisition, the management has raised its estimate of group turnover by $90 million to $590 million for FY07. The European business will account for more than 60% of total revenues. The key concern, however, could be the acquisition’s impact on margins. Margins could get hit by about 100 basis points during the current year, as Negma recorded an EBIDTA margin of about 18% last year.