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Godrej Consumer Products Ltd Buys Darling Group Holdings Hair Care Firm

Godrej Consumer Products Ltd (GCPL) on Wednesday said it is buying 51% stake in Africa’s hair care firm Darling Group Holdings for an undisclosed sum.

This is the fourth acquisition in Africa by the homegrown consumer goods maker in the last four years. It had acquired South African hair colour company Rapidol in 2006 and hair accessory maker Kinky in 2008. Then, in 2010, it acquired personal care company Tura of Nigeria.

The latest acquisition will be made in a phased manner over the next two years, wherein GCPL will take over Darling Group’s operations in 14 sub-Saharan countries in Africa.

In 3-5 years from now, GCPL will have the option of increasing ownership to 100% in the hair care firm.

Vivek Gambhir, chief strategy officer, Godrej Group said Africa’s contribution to GCPL’s revenues will significantly shoot up post this acquisition.

The region currently contributes 15% to GCPL’s international revenues, which the company calls its “next frontier of growth.”

GCPL will fund the buy through a mix of debt and internal accruals and expects the acquisition to be earnings per share, or EPS, accretive in the first year. It is already devising strategies to use this acquisition as a means to market and distribute other home and personal care products from its portfolio to the African markets.

Darling Group operates in 14 countries across sub-Saharan Africa and is the market leader in hair extension products —- a category estimated to be $1 billion in size and growing at 15% annually. The group manufactures and distributes hair extension products like braids, weave-ons, ponytails, wigs and human hair products under the brands Darling and Amigos.

Gambhir said the group is now sufficiently represented in the region with a distribution foothold in over 14 countries, and may not need to make more acquisitions in Africa.

“The focus, from here, will be on consolidation in Africa,” he said.

GCPL made a series of acquisitions last calendar, including Nigerian Tura, Indonesian household insecticides player PT Megasari Makmur Group, South American hair care players Issue Group and Argencos SA, and Indian brands Swastik soaps and liquid detergent Genteel. Additionally, it bought 51% in its joint venture with US’ Sara Lee Corporation.

The company is already present in the hair colour segment in 14 countries in Africa with its brand Inecto, which has an 85% market share. Household insecticides is another category the company wants to launch in Africa.

“We are in the process of understanding the household insecticides market (in Africa). It should be large and attractive. Over time, we do see potential for our insecticides business there,” Gambhir said.

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