Emami acquires Dermicool. Becomes No. 1 in the category.

The company has acquired the prickly heat talc brand from Reckitt.

Key points to note –

  • Consideration is Rs 432 crore to be funded entirely from the internal accruals. Emami had cash equivalents of Rs 406 crore as on September 30, 2021 and generated operating cash of Rs 922 crore in FY 21. Funding of the transaction internally is not an issue. Leverage wise also Company had negligible debt of Rs 128 cr as on September 30, 2021.
  • The prickly heat powder and cool talc segment in India is estimated at Rs 700-800 crore. Dermicool is estimated to account for 20% of the market. Besides, Emami already has Navratna Cool Talc in this category. Both brands together will allow Emami to become No. 1 in the category with an estimated market share of 45%.
  • Dermicool is estimated to have reported revenues of Rs 113 crore with an EBITDA margin of 35% in CY 2021. The acquisition valuation hence works out at 10-11x of trailing EBITDA.

The transaction is in line with the stated strategy of Emami to be open to grow through the inorganic route. Company’s previous major buys include –

  • 2008: Zandu Pharmaceuticals for Rs 730 crore
  • 2015: Kesh King for Rs 1,651 crore
  • 2019: German skincare brand Creme 21 for an undisclosed amount
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