Dabur acquires Sesa Care to expand hair care portfolio

New Delhi: Dabur India Ltd will acquire 51 per cent stake in hair care company Sesa Care Pvt. The enterprise value of a limited company is $315-325 Crores.

Dabur will pay $Invested Rs 126 million in private equity fund True North, an existing owner of a hair care company, to acquire 51% of the total paid-up cumulative redeemable preference shares (CRPS) of Sesa. The FMCG giant will also assume Sesa’s debt $289 crore, will be backed by corporate guarantees from Dabur

Subsequently, Sesa Care will merge with Dabur. As part of the merger, Dabur will issue shares in exchange for Sesa Care shares and the remaining 49% CRPS.

Dabur said in a regulatory filing that the merger is expected to be completed within 15 to 18 months, subject to approvals. Ambit Private Ltd was the advisor on the transaction.

This is Dabur’s second acquisition in the past two years. In 2022, it acquired a 51% stake in spice manufacturer Badshah Masala Pvt Ltd for $587.52 Crores.

Wednesday’s announcement will help Dabur expand its $The Rs 900-crore Ayurvedic hair oil market is a critical gap in its current product portfolio.

“The proposed merger brings significant revenue and cost synergies. Dabur’s extensive distribution network, category expertise and access to key international markets can be leveraged to grow the brand and expand its footprint,” the company said in an exchange filing expressed in the document.

Dabur sells hair oil under the brands Dabur Amla, Vatika and Dabur Almond. The move will further strengthen its position in the value-added hair oil market and compete with rivals such as Hindustan Unilever Ltd.’s Indulekha, Emami’s Kesh King and Marico’s Parachute.

In 2015, Kolkata-based consumer goods company Emami acquired Ayurvedic hair and scalp care brand Kesh King. $1,651 Crores.

Sesa Care also sells its flagship product, Sesa Ayurvedic Oil, in addition to shampoo and conditioner. In 2018, True North acquired a majority stake in Ban Labs Pst Ltd., a maker of Sesa hair oil in Rajkot.

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Dabur reported on Wednesday that its consolidated net profit (attributable to holding company owners) fell 17.5% year-on-year $Revenue for the quarter ended September was Rs 425 crore. Its comprehensive operating income is $3028.59 crore, down 5.5%.

In FY24, Sesa Care’s turnover was $1.33 billion rupees. According to regulatory filings by Dabur, the company has a manufacturing unit in Himachal Pradesh and has an 11% share in the hair oil market in the country.

Sesa also has a wholly-owned subsidiary in Bangladesh, part of Sesa Care Bangladesh Private Limited. Upon completion of the merger, the business will become a wholly-owned subsidiary of Dabur.

“This merger is in line with our long-term vision to consolidate our product portfolio and tap new growth opportunities. By combining Sesa’s Ayurvedic hair care product range and expertise with Dabur’s extensive distribution network, category expertise and access to key international markets Combining the opportunities, we aim to grow the Sesa brand and deliver enhanced value to our stakeholders in addition to revenue and cost synergies,” said CEO Mohit Malhotra.

Abhinav Dhall, executive director and group head, corporate strategy, Dabur, said Dabur will continue to aggressively look for more targets in both traditional and new-age segments.

Also read: Dabur’s September quarterly update pours cold water on market hopes