Reckitt buys Paras for $726 million

As the year draws to a close, private-equity firm Actis orchestrates the sale of its portfolio company Paras Pharmaceuticals in India to Reckitt Benckiser for $726 million.

Reckitt Benckiser has bought Paras Pharmaceuticals for Rs32.6 billion ($726 million) from its shareholders, which include the founding family, the Patels, and private-equity firms Actis and Sequoia. The deal captures the dual trends of consolidation in the consumer space in Asia and private-equity firms exiting investments, which have characterised this year.

Paras is a privately owned Indian company with a portfolio of leading over-the-counter health and personal care brands in India, including: Moov, a topical analgesic pain ointment;  D’Cold, a leading cold and flu remedy;  Dermicool, a prickly heat powder; Krack, a medicated skin treatment for cracked heels; and Itch Guard and Ring Guard anti fungal creams. Moov, D’Cold and Dermicool are the second most widely sold brands in their respective categories. Paras also has a personal care business led by Set Wet, a leading hair gel and deodorant brand. Reckitt is also acquiring the Paras manufacturing facilities in Northern India, which employ around 700 people.

In the financial year to March 2010, Paras had sales of Rs4 billion on which it earned an Ebitda of Rs1.1 billion.

Actis invested $42 million in Ahmedabad-based Paras in September 2006 in exchange for a 23% stake. In 2008, it increased its stake to 60%. Currently, Actis owns around 63%, while another private-equity firm, Sequoia Capital, and the Patel family own the balance. The deal is one of the largest exits from a private equity-controlled company in India.

Morgan Stanley led an auction of Paras on behalf of all its shareholders. Buyers said to have expressed an interest include Indian companies Dabur, Marico and Piramal Healthcare, while global majors Sanofi-Aventis, Abbott and Japan’s Taisho Pharmaceuticals also looked at the opportunity, said sources.

“The acquisition of Paras is another step forward in RB’s growth strategy in consumer healthcare,” said Reckitt Benckiser's chief executive officer Bart Becht in a written statement.  “It creates a material healthcare business in India, one of the most promising healthcare markets in the world, with the addition of a number of strong and leading brands.”

Reckitt Benckiser is headquartered in the United Kingdom. It operates in over 60 countries, sells in almost 200 and has a product portfolio spanning household, health and personal care. Its brand portfolio is led by power-brands including Finish, Lysol, Dettol, Vanish, Woolite and Durex. The 19 power-brands account for 70% of net revenue. 

Reckitt was advised on the buy-side by J.P. Morgan.

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