By OUR STAFF REPORTER
Haridwar, 1 Jul: The Board of Patanjali Foods Limited (hereinafter referred to as “PFL” or “Company”) has approved the proposal of Patanjali Ayurved Limited’s (“PAL”) to acquire its Home and Personal Care (“HPC”) Business, accelerating the Company’s transition into a leading FMCG company. The HPC business of PAL currently has a strong brand equity in India’s FMCG space and enjoys a loyal consumer base across the country. It presently caters to four key segments, being (i) dental care, (ii) skin care, (iii) home care, and (iv) hair care. This strategic initiative for acquisition of HPC business shall strengthen the company’s existing FMCG product portfolio with an array of marquee brands and also contribute to the growth in terms of revenue and EBITDA.
PFL prepares to acquire the entire HPC Business of PAL on a going concern basis, and includes all the assets and liabilities attributable to the business, relevant employees, distribution network, contracts, licenses, permits, consents, and approvals integral to this operation (hereafter referred to as the “Business Undertaking”). The closing of the acquisition is subject to fulfilment of various conditions precedent which are largely regulatory approvals required for the transfer of the Business Undertaking. Further, the Company also acknowledges the value of the intellectual properties of the HPC Business’ product portfolio and its market importance. Accordingly, the Company and PAL have also agreed to enter into a licensing agreement permitting the Company to use the trademarks and associated intellectual property rights, owned by PAL, that relate to the product portfolio of the HPC Business.
The transfer of the HPC business has been mutually negotiated between the Company and PAL (basis valuation exercises conducted by independent valuers) for a lump sum consideration of Rs 1100,00,00,000which shall be subject to customary closing date adjustments and on such other terms as set out in the business transfer agreement to be executed between the Company and PAL. Separately, a 20-year licensing arrangement for a 3 % turnover based fee along with other conditions has been agreed between the Company and PAL.
The acquisition will lead to a consolidation of ‘Patanjali’ brand FMCG products portfolio. The acquisition will bring along with it multiple key synergies in terms of brand equity and enhancements, product innovations, cost optimisation, infrastructure & operational efficiencies and positive impact on market share.
With this acquisition, the company also informed that it has reaffirmed its position to be a strong FMCG company in its journey towards becoming a major player in the FMCG space as committed to its shareholders at the time of its maiden FPO.
Pursuant to the approval of the Board of PFL, the Company shall now take necessary steps to execute the definite agreements in connection with the acquisition as well as apply for necessary approvals integral to the transaction.
