BANGALORE: Wipro on Thursday brought 229-year-old British brand Yardley’s business in select markets including India from UK’s Lornamead Group to
stretch its personal care portfolio to the premium range.
Wipro Consumer Care and Lighting, the consumer products arm of the software firm, has snapped up Yardley business across Asia, the Middle East, Australasia as well as north and west Africa for $45.5 million (Rs 215 crore), continuing its takeover spree that included Unza. ET had reported on October 13 that the two parties were close to sealing a deal. Yardley will be merged into Wipro Consumer Care’s fold by mid-December.
“We picked up a lot of debt from Unza’s balance sheet when we acquired it. But Yardley is a profitable brand and will add to our operating margins which are at 10-13%,” Vineet Agrawal, president of Wipro Consumer Care, told reporters here.
Lornamead, controlled by British billionaire Mike Jatania, acquired the Yardley brand in September 2005 for £60 million. It will retain the Yardley business in Europe and America. Funded through 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,” said Anand Ramanathan, an FMCG analyst at KPMG. “Synergies will improve if Wipro took a bottoms-up approach of gearing its sales force and partners towards this change to premium range,” he added.
Yardley’s Lavender talcum-to-soap range is priced around 50% higher than the costliest brand in Wipro’s existing portfolio, Unza’s Enchanteur range. The move will also strategically boost 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% to the acquisitions revenues, with 20% coming from India and the remainder from other Asian markets.
Wipro is also planning 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,” said Mr Agrawal.
“We are also evaluating the manufacture of Yardley products such as soaps through our factories,” he added. It 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 arising out of merging common suppliers. Wipro Consumer Care has made a series of acquisitions in the past six years.
It arrived on the acquisition map in 2003 by picking up Hindustan Unilever’s glucose drink brand Glucovita. It bought Kerala-based ayurvedic brand Chandrika a year later and Delhi-based North-west Switchgear’s switches business in 2006.
The division shot 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. The Yardley 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 8% of Wipro’s overall revenues. Wipro’s stock closed at Rs 598.30 on the BSE, a rise of 0.42% on Thursday.
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