The Telegraph
Wednesday , January 2 , 2013
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Godrej arm buys Colgate deo brand

Mumbai, Jan. 1: Godrej Consumer Products Ltd (GCPL) today announced that its UK-based subsidiary has acquired the Soft & Gentle brand from Colgate-Palmolive for an undisclosed sum.

The Soft & Gentle brand posted sales of 21 million in 2011. It is the UK’s fourth largest female deodorant brand by market share. Keyline Brands Ltd, GCPL’s subsidiary in the UK, carried out the transaction.

“The acquisition of Soft & Gentle by Keyline Brands will add profitable scale to our UK business. Over the last few years, Keyline Brands has delivered good performance and grown in double digits in a very tough market environment that is witnessing little to no growth,” GCPL chairman Adi Godrej said.

Godrej said the UK business had historically a higher mix of distributed brands than owned brands. However, the group has been working on changing the mix towards owned brands. It is expected that with the acquisition, the salience of owned brands will become greater than that of distributed brands.

The acquisition is being funded by low-cost debt and the impact on GCPL’s consolidated debt/equity ratio is expected to be only 0.03.

“We expect this acquisition to be accretive in year one,” Godrej said, while disclosing that it also has a strong team in the UK that will work on leveraging the synergies from the acquisition and driving the future growth of the acquired brand.

Keyline acquisition

Established in 1990 in the UK, Keyline Brands was acquired by GCPL in October 2005. Keyline operates in the household and personal care space and its portfolio includes brands such as Cuticura, Aapri, Inecto and Touch of Silver.

The Keyline business will selectively bolt on brands that are strategic, financially accretive and provide significant synergies.

Anand Rangaswamy, managing director of Keyline Brands, felt that the subsidiary would be in a position to leverage on the strong latent brand equity of Soft & Gentle.

He added that the plan was to develop a further range extensions within the female personal care strategy and create a strong campaign to engage consumers and drive growth for the brand.

The acquisition of Soft & Gentle forms part of GCPL’s plan to strengthen its footprint in global markets. It had acquired 60 per cent rights in Cosmetica Nacional, a Chilean hair colour firm. The earlier acquisition of the pan-African Darling Group, and Rapidol and Kinky in South Africa has given GCPL leading positions in the fast-growing African ethnic hair care market.