Jyothy Laboratories will pay Rs 162.6 crore to buy out Henkel India from its German parent. In a deal approved by its board on Thursday, it proposes to acquire 59.3 million equity shares, or 50.97 per cent stake, at Rs 20 a piece, aggregating Rs 118.7 crore.
It will refinance the existing debt of Henkel India and buy out the redeemable cumulative preference shares held by Henkel AG in the latter. Henkel India owes around Rs 454 crore to its lenders. Jyothy will purchase 68 million preference shares in Henkel India from its parent company for Rs 43.9 crore, subject to regulatory approvals.
The acquisition will trigger the mandatory open offer of 20 per cent to the public shareholders of Henkel India, Jyothy said. This will be managed by Mape Advisory, which also structured the current deal. Public and institutions hold 32.33 per cent in Henkel India.
Jyothy, the maker of Ujala fabric whitener, had earlier acquired a 14.9 per cent stake in Henkel India from A C Muthiah at Rs 35 per share, aggregating Rs 60.7 crore.
Henkel AG will have an option to acquire up to 26 per cent stake in Jyothy after five years. While Jyothy declined to furnish further details, it is likely to rope in private equity partner Apax Partners to finance the deal. Apax will invest $100 million for a 10-12 per cent stake in Jyothy. It is this stake that Henkel has the option to pick up, with the choice to take it up to 26 per cent, according to persons in the know.
Apax, according to the sources, is expected to add “strategic value” to the Mumbai-based company. Its entry will also give a potential exit route to Jyothy’s existing institutional investors, who came in through a Rs 228-crore qualified institutional placement last year.
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“The private equity placement will happen at Jyothy, not Henkel India. But it will happen later, once the deal is all stitched up. In my view, Apax should come on board in the next four-six months, after the Henkel open offer,” a person familiar with the development had told Business Standard in a report, appeared on April 21.
The acquisition will elevate Jyothy to amongst the top five fast moving consumer goods (FMCG) players in India.
M P Ramachandran, chairman and managing director of Jyothy Laboratories, said, “This is a historic and much anticipated move by us, which will help us in strengthening our position in urban India. It will also give us access to any new product launches of Henkel AG in the future.”