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BW Businessworld

Unlocking The Brand Value

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On 13 December, British consumer products company Reckitt Benckiser agreed to acquire Ahmedabad-based Paras Pharmaceuticals for $726 million (Rs 3,260 crore). The unlisted Paras's leading over-the-counter (OTC) medication products include Moov (pain relief ointment) and Krack (heel care cream). This is the largest healthcare OTC M&A (merger and acquisition) deal in India till date (see ‘Strategic Deals'). The deal is also the biggest exit for UK-based private equity (PE) company Actis in India till date. Actis entered Paras in 2006, investing $135 million over two tranches to pick up a 63 per cent stake. Here is a look at how the deal unfolded:

August 2010
Actis, Sequoia Capital and Paras Pharmaceuticals' promoter Girish Patel retain Morgan Stanley to find buyers for the company. Actis and Sequoia own 70 per cent, while the balance rests primarily with Girish Patel. Their combined stake is valued at over $700 million.

September 2010
Kolkata-based Emami and Mumbai-based Marico, both leading Indian players in personal care products, evince interest in buying Paras.

September 2010
Morgan Stanley reportedly invites bids from multinational drug makers Pfizer, GlaxoSmithKline, Sanofi-Aventis, Daiichi Sankyo and Taisho Pharma.

November 2010

Six bidders, including Emami and Reckitt Benckiser, are shortlisted as part of Round 1 of the bidding process. Bidders are a mix of pharma and personal care products firms. Taisho does not participate in the bidding process. Emami, according to sources close to one of the PE investors in Paras, puts in a conditional bid, which includes an offer to swap Girish Patel's stake for a minority shareholding in Emami.

November 2010
Three bidders, including Emami and Reckitt, are shortlisted in Round 2 of the bidding process.

December 2010
Reckitt wins the bid and agrees to buy out all shareholders in a $726-million, all-cash deal. Paras's revenues as on 31 March 2010 were at over Rs 400 crore. Emami, despite reportedly quoting a higher bid, loses out. The deal formalities will close in a few weeks. Actis's 63 per cent stake is worth $457.38 million (Rs 2,076.50 crore).

Sequoia, which invested $12 million in 2006 for a 7 per cent stake, stands to make $50.8 million (Rs 230.63 crore). Paras's promoters' 30 per cent stake is worth $217.7 million (Rs 988.35 crore).

(This story was published in Businessworld Issue Dated 27-12-2010)