Wipro to buy FMCG firm for $144 mn

LD Waxsons' acquisition to help consolidate its consumer care business in Malaysia, Singapore

Bangalore-based Wipro, which has interests in consumer care goods and lighting, besides IT services, on Saturday said it had signed a definitive agreement to acquire 100 per cent ownership in LD Waxsons, a Singapore-based FMCG company. The acquisition will be done for an all-cash consideration of $144 million (about Rs 784 crore), which is 2.1 times the Singapore company’s expected 2012 sales turnover of $68 million.

The funding will be done via internal accruals. As on September 30, Wipro had Rs 6,657. 4 crore of cash and cash equivalents.

This will be Wipro’s second-biggest acquisition for its consumer care business — the largest being Unza, another Singapore-headquartered company it had acquired in 2007 for about $246 million (Rs 1,010 crore). This will also be Wipro’s second acquisition in Southeast Asia and the fourth globally in the FMCG space.

The acquisition, expected to be closed within 60 days, will give Wipro the ownership of LD Waxsons’ skincare brands Bio-essence and Ginvera, and health care brand Ebene. These skincare brands have a strong presence in Singapore and Malaysia, with market shares of nine per cent and 8.5 per cent, respectively. The brands also have a sizeable presence in markets such as China, Taiwan, Hong Kong and Thailand. Bio-essence Bird’s Nest, a popular skincare brand, is quite popular in China and among ethnic Chinese in other parts of the world.
 

PARALLEL FOCUS
Wipro’s acquisitions for its consumer care business

• Apr 2003 Glucovita brand from Hindustan Lever Ltd for about Rs 5 crore
• Jun 2004 Chandrika, an ayurvedic soap brand, for about Rs 31 crore
• Jul 2007 Unza Holdings Ltd, a Singapore-based FMCG firm, for Rs 1,010.2 crore in an all-cash deal
• Nov 2009 The Yardley business in Asia, West Asia, Australasia and certain African markets from UK’s Lornamead Group, for $45.5 million
• Jul 2012 The Yardley business in the UK and some other European markets, excluding Germany and Austria; financial details not disclosed, but the company said the brands reported revenues of Rs 29.6 crore in UK in FY12

LD Waxsons has manufacturing facilities in China’s Xiamen province and Malaysia’s Kuala Lumpur — employing about 1,500 people. The latest acquisition will help Wipro, which already owns two manufacturing units in Kuala Lumpur and one in China’s Guangdong province from its previous buys, expand its global manufacturing capability for its consumer care business.

Vineet Agrawal, president of Wipro Consumer Care & Lighting, says the acquisition will help his company improve its market share to 26 per cent from 16 per cent at present, and its position from eighth to second, in Malaysia’s skincare segment. Besides, it will also give the company entry into the Taiwanese market, where it currently does not have any presence.

“We see LD Waxsons as a good strategic fit. This transaction helps us consolidate our successful facial skincare business in Malaysia to a dominant leadership position, and moves us to market leadership in Singapore as well,” Agrawal adds.

He said the acquired entity was expected to post an operating margin of 10-11 per cent, in line with Wipro Consumer’s.

After the acquisition is completed, Wipro’s consumer care business will derive over 50 per cent of its revenues from foreign markets, compared with about 45 per cent at present, and will have about 5,500 employees located outside India.