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Wipro buys Yardley’s for $45.5 Million
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Lathesh Suryakantha

Wipro buys Yardley’s for $45.5 Million

Bangalore: Wipro has brought 229 year old British brand Yardley’s business in select markets such as India, Asia, Australiasia, Middle East and north and west Africa to stretch its personal care portfolio to the premium range.

Wipro Consumer Care and Lighting, the consumer products arm of the software firm, has taken up Yardley business across these areas for $45.5 million (Rs. 215 crore), continuing its takeover spree that included Unza.

“We picked up a lot of debt from Unza’s balance sheet when we acquired it. Yardley is a profitable brand and will add to our operating margins which are at 10-13 percent,” said Vineet Agrawal, President, Wipro Consumer Care.

Being controlled by British billionaire Mike Jatania, Lornamead had acquired the Yardley brand in September 2005 for 60 million pounds. It will retain the Yardley business in Europe and America. Funded by internal accruals, this deal will enable Wipro straddle different price points and give it greater bargaining power for key accounts in certain markets.

“Yardley is a great fit for Wipro if it wants to go beyond Santoor to include more premium brands. Synergies will improve if Wipro took a bottoms-up approach of gearing its sales force and partners towards this change to premium range,” said Anand Ramanathan, FMCG Analyst, KPMG.

Yardley’s Lavender talcum-to-soap range is priced around 50 percent higher than the costliest brand in Wipro’s existing portfolio, Unza’s Enchanteur range. This move will also strategically surge Wipro Consumer Care’s foothold in high growth markets such as the Middle East where its overall revenue is projected to double to $30-35 million. The Middle East contributes 70 percent to the acquisitions revenues, with 20 percent coming from India and the remainder from other Asian markets.

Wipro is also in plans to increase the product range under the Yardley brand. “We see certain gaps in Yardley’s product range such as body washes and deodorant roll-ons, which we feel could be added to increase relevance with the youth. We are also evaluating the manufacture of Yardley products such as soaps through our factories,” said Agarwal.

The company plans to leverage its distribution reach across 50,000 outlets in metros and tier-I cities to grow the brand in India and sees cost efficiencies rising out of merging common suppliers. Wipro Consumer Care has made a series of acquisitions in the past six years.

Wipro arrived on the acquisition stage in 2003 by picking up Hindustan Unilever’s glucose drink brand Glucovita. It bought Kerala based ayurvedic brand Chandrika after one year and Delhi based North West Switchgear’s switches business in 2006.

Wipro Consumer Care division came into limelight in 2007 with its $246 million purchase of Singapore based personal care firm Unza Holdings, which has a significant presence across South-East Asian markets. This deal will see Wipro Consumer Care’s contribution to the parent’s top line growing by 50 basis points. In the second quarter, the consumer-care division notched up eight percent of Wipro’s overall revenues. Wipro’s stock closed at Rs. 598.30 on the Bombay Stock Exchange, a rise of 0.42 percent on Thursday.

Source: SiliconIndia

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