Dabur Foods to merge with parent firm

The board of Delhi-based consumer goods company Dabur India (DIL) today announced the decision to merge its wholly owned subsidiary, Dabur Foods (DFL), with itself to consolidate its growth with the parent company.

Through this merger, Dabur India, which reported net sales in excess of Rs 1,700 crore in 2006-07, will now have a combined turnover of Rs 2,233 crore. The merger will be effective from April 1, 2007.

As a result of the merger, DFL will become a business division of DIL alongside the consumer care division (CCD) and the consumer health division (CHD). As DIL owns 100 per cent of DFL's shares, no new shares will be issued as a result of the merger.

The merger with Dabur India would extract synergies and unlock operational efficiencies for Dabur Foods.

"We will be able to invest and expand more effectively due to the combined scale, profitability and global reach," said Sunil Duggal, chief executive, Dabur India.

He added, "Dabur Foods has been one of the fastest-growing businesses, reporting 35 per cent CAGR for the past five years. We believe this merger is a unique opportunity to combine the strengths of a foods company with those of a growing and profitable FMCG business to create an extraordinarily strong and rapidly growing global competitor in the health and wellness space."

Amit Burman, chief executive of Dabur Foods, termed the merger with its parent company as a "logical step".

Analysts say that the merger is a precursor to inorganic growth-led strategy.

"The merger is a clear indication that Dabur has identified its foods division as a driver of growth for the future. The combined balance sheet of both the entities would enable the company to invest more in this division and we expect acquisitions and new launches in the coming months," said Anand Shah, an analyst at Angel Broking.