Reckitt Benckiser Group Plc to purchase India’s Paras Pharmaceuticals Ltd

Reckitt Benckiser Group Plc Tuesday announced the intended purchase of India’s Paras Pharmaceuticals Ltd.  Reckitt Benckiser Group Plc is the maker of Lysol cleaners and Nurofen painkillers. The firm said it had agreed to the purchase of Paras Pharmaceuticals Ltd for about 32.6 billion rupees ($724 million), extending its push into consumer healthcare.

Under the terms of the agreement, Reckitt Benckiser will acquire a 63 per cent stake in Paras from Actis LLP, the companies said in a statement today. Sequoia Capital and the remaining Paras shareholders, including the company’s founder Girish Patel and his family, will also sell their shares to the Slough, an England-based Company.

The investment is in line with Paras’ aim of expanding in health and personal care to help buffer slower- growth in sales of household cleaners. Reckitt Benckiser this year agreed to buy U.K. condom maker SSL International Plc for 2.54 billion pounds ($4 billion).

According to Bloomberg calculations, the maker of Veet hair remover is paying 8.1 times sales, or 30 times operating earnings before interest, taxes, depreciation and amortization.

SSL was acquired for the equivalent of 3.1 times sales or 18 times earnings before interest, taxes, depreciation and amortization. That was Reckitt’s first major purchase since the $2.3 billion takeover of Adams Respiratory Therapeutics in 2008.

Developing markets, which include India, Latin America, Africa, Middle East and Asia, account for about a fifth of Reckitt’s revenue. That trails Unilever’s Asia and Africa division and Procter & Gamble Co.’s developing markets, Latin America and northeast Asia units, which both account for 37 percent of group sales.

Paras makes BoroSoft moisturizing skin cream and Zatak deodorant. Other brands include D’Cold, the flu remedy, Dermicol for prickly heat, Krack, a cracked heel treatment, Itch Guard anti-fungal cream, and Set Wet, a hair gel and deodorant brand.

Actis stands to make more than a threefold gain on its 2006 investment in Paras, based on a purchase price of $145 million disclosed in an Aug. 3 e-mail.

The London-based private-equity firm has $4.7 billion of funds under management, according to today’s statement. It will continue to pursue investments in India’s consumer-products and manufacturing industry, and financial and business services, said J.M. Trivedi, an Actis partner and head of South Asia.

About $1 billion has been earmarked for India of which more than half has already been committed, Trivedi said in an interview. There will be equal focus on buyouts and taking minority stakes, he said.

14 Dec 2010.