Emami acquires Dermicool prickly heat talc brand from Reckitt for Rs 432 cr

Deal will be funded through internal accruals, is the biggest by Emami after 'Kesh King' hair and scalp products (2015), and Zandu Pharma (2008)

Fast moving consumer goods company, Emami, on Friday, announced the acquisition of  “Dermicool” – one of the leading brands in the prickly heat powder and cool talc segment – from Reckitt for a total consideration of Rs 432 crore (excluding taxes and duties).

The acquisition will be funded through internal accruals and is subject to customary closing conditions, the company said in a statement. The Dermicool acquisition will be one of Emami’s biggest acquisitions after ‘Kesh King’ brand of hair and scalp products in 2015 and Zandu Pharmaceuticals in 2008.

Dermicool has a 20 per cent market share in the high growth and low penetrated category, according to Emami. Combined with Emami’s Navratna Cool Talc, Emami will become a leader in this niche category which would also help realise synergetic benefits and optimize costs, the company said.

Harsha V Agarwal, director, Emami, said that the acquisition of Dermicool offers “great” synergy with existing businesses and is a perfect strategic fit.

“It will strengthen our presence to make us #1 in the prickly heat powder and cool talc category. With increasing global warming and soaring summer temperatures, such problem solution niche products are poised for strong growth in the future,” Agarwal added.

In the statement, the company said that Emami, as one of its core business strategies, has always been open to growth through the inorganic route. The company considers acquisitions that not only add value and have synergy with the current line of businesses, but also offer opportunities for the organization to be present in categories that have high growth potential, it said.

The prickly heat powder and cool talc segment is pegged at Rs 700-800 crore. “There is a huge potential to grow in Dermicool. For the first couple of years we may consolidate our position and in the meanwhile we will work on product extensions under the brand,” said Agarwal.

According to Abneesh Roy of Edelweiss Securities, Emami’s market share now moves to 45 per cent from 25 per cent as Dermicool has a 20 per cent market share. Revenues of Dermicool in CY21 was Rs 113 crore and EBITDA margin at 35 per cent, Roy added.

Emami has also been investing in D2C brands. Agarwal said that D2C brands have a different target audience and are into very different categories. “We are looking for good opportunities in D2C as well as traditional brands,” Agarwal said.

Emami’s major brands are Boroplus, Navratna, Zandu, Fair & Handsome and Kesh King among others.

EMAMI’s MAJOR BUYS

2008: Zandu Pharmaceuticals for Rs 730 crore

2015: Kesh King for Rs 1,651 crore

2019: Creme 21 for an undisclosed amount