May 24 (Bloomberg) -- Godrej Consumer Products Ltd., India’s second-biggest maker of bath soap, rose after saying it agreed to buy Latin America’s Issue Group to gain a foothold in the continent’s hair color business.
The stock gained 2.3 percent to 327.10 rupees as of 12:22 p.m. in Mumbai, compared with a 1.7 percent gain in the benchmark Sensitive Index. Godrej climbed as much as 17 percent earlier.
Godrej Consumer yesterday said it agreed to acquire Laboratoria Cuenca, Consell SA, Issue Uruguay and Issue Brazil, which are collectively known as the Issue Group. The businesses had revenue of $33 million in 2009. The purchase is valued at eight times Issue Group’s earnings before interest, taxes, depreciation and amortization, and will add to Godrej’s earnings per share in the first year, the Mumbai-based company said in an e-mailed statement.
“The Issue Group provides us the perfect platform for establishing a strong presence in the fast growing hair color markets in Latin America,” Chairman Adi Godrej said in the statement, which did not give a final value for the acquisition.
Godrej Consumer will buy companies in Asia, Africa and Latin America and has permission from its board to raise as much as 30 billion rupees ($657 million) selling debt or shares, Billionaire Godrej said in a May 14 interview.
The maker of Cinthol soaps and Renew hair color will continue to invest in emerging markets and probably not in developed countries because its expertise is in “low-cost, value for money products,” Godrej had said.
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