HUL zooms 10% after announcing acquisition of Vwash from Glenmark

Shares of Hindustan Unilever (HUL) surged 10 per cent to Rs 2,059.80 on the BSE on Tuesday after the consumer goods major announced the acquisition of intimate hygiene brand VWash from Glenmark Pharmaceuticals for an undisclosed sum.

The deal would include an upfront cash payment and a deferred consideration over the next three years, the firm said in an exchange filing yesterday. The acquisition includes intellectual property, trademark and design of the brand. READ THE EXCHANGE FILING HERE

“The acquisition gives us entry into the currently underpenetrated and rapidly growing female intimate hygiene segment. The brand has a leadership position and fits well into the white spaces in our Beauty and Personal Care business," HUL's Chairman and Managing Director, Sanjiv Mehta said.

Glenmark will manufacture VWash for HUL over the next one year after which the production arrangement would be reviewed, HUL's chief financial officer Srinivas Phatak said in a conference call on Monday.

VWash was launched by Glenmark in 2013 and has established itself as the market leader in the female intimate hygiene market, an emerging category.

Commenting on the acquisition, brokerage firm Motilal Oswal said, "The ‘VWash’ brand acquisition is part of HUVR’s Beauty and Personal Care strategy which involves adding new growth segments. The acquisition helps HUVR’s channel presence in chemist channel, health & beauty segment and in e-commerce."

About the 'Vwash' brand, analysts at the brokerage firm said," Intimate hygiene is a large growth opportunity for the future and penetration is in low-single-digit (<8%) even in urban India. The brand was launched in 2013 and is the leader in the intimate hygiene category. The gap between the brand and its competitors is also large. It has good gross margins in the category as well along with synergies with the HUVR distribution muscle."

The brokerage has a 'Buy' rating on the stock with the target of Rs 2,425, 30 per cent upside. 

At 10 AM, the stock had pared some gains and was trading 4.5 per cent up at Rs 1,957.45 as compared to 0.8 per cent gain in the S&P BSE Sensex. Around 9.7 lakh shares have changed hands on the counter on the NSE and BSE combined. Glenmark Pharmaceuticals also jumped 8.9 per cent to Rs 204.75 after the deal.