Marico, the consumer goods major, is eyeing a five per cent stake sale to fund its Rs 600-crore acquisition of Paras Pharmaceuticals' personal care portfolio.
In February, it had said it was acquiring Setwet, Livon, Zatak and a few other personal care products from Reckitt, the owner of Paras. Investment banking sources say the Mumbai-headquartered company was looking to raise Rs 500 crore from the stake sale. Private equity (PE) companies tapped include Apax, KKR, Khazana, TPG, ChrysCapital and GIC, they said. Citibank and Kotak are advisors to Marico on the deal.
When asked, Saugata Gupta, chief executive officer of the consumer products division said the company does not comment on market speculation. But persons in the know say the deal is on and negotiations are centred on the sale price. Marico is said to be asking for a significant premium to its current market price, which is in the region of Rs 171.
The stock was down 1.9 per cent (or Rs 3.25) on Monday, in a market that closed up 0.4 per cent on the Bombay Stock Exchange (BSE). Its intra-day high was Rs 173.95, while its low was Rs 170.
The promoter holding in Marico during the quarter ending December 31, 2011, was 62.78 per cent. The company is expected to issue fresh equity shares as part of the transaction.
This would be the second instance of a stake sale by a fast-moving consumer goods major in three months. On January 21, Godrej Consumer (GCPL) had offloaded 4.9 per cent stake to Singapore-headquartered private equity player Temasek, for Rs 685 crore. Temasek made the investment through a wholly-owned subsidiary, Baytree, which bought 16.7 million shares in GCPL for Rs 410 each. At the time, GCPL's share price was about Rs 401 on the Bombay Stock Exchange. Temasek got no board rights with the investment.
Besides raising money, GCPL's move was also aimed at bringing down its debt to equity ratio below one. As on September 30, 2011, GCPL's debt-equity ratio was 1.28. Marico's is 0.7.
