Godrej Consumer Products Ltd (GCPL) announced on Friday evening that it has entered into an agreement to acquire Strength of Nature LLC (SON), a hair care products company for women of African descent.
This acquisition is a further step to accelerate GCPL's global "3 by 3" strategy and scale up its presence in Africa. The acquisition is expected to be earnings per share (EPS) accretive for GCPL from year one itself, the company said in a statement.
"Over the past few years, we have been scaling up our international presence with acquisitions that fit well in our 3 by 3 strategy—a presence in emerging markets in Asia, Africa and Latin America through three core categories—hair care, home care and personal care," said Adi Godrej, chairman, Godrej Group. "These strategic acquisitions have strongly aided our growth story. Through them, we have both extended our core businesses and implicitly broadened our presence to a wider canvas."
SON, a US-based company with a significant presence in Africa and the Caribbean, is one of the fastest growing companies in the hair care category for women of African descent, the company said in its statement.
SON has a compelling portfolio of heritage, category-leading brands in wet hair care, across relaxers, maintenance, styling and shampoos. This includes iconic hair care brands with affordable and innovative products, which have been serving women of African descent across 50 countries. Among them, are African Pride, TCB, Just for Me, Motions and Profectiv MegaGrowth. Annualised calendar year 2015 revenues for the company were $95 million.
Vivek Gambhir, managing director, GCPL, said, "Strength of Nature has a strong track record of serving consumers across Africa and the USA through its robust portfolio of heritage, category leading brands. We look forward to leveraging its strong brand equity for our business."
Speaking on GCPL's focus on Africa, Godrej said, "Africa is a key part of our growth strategy and we strongly believe that it holds tremendous potential. Our businesses in the region have been outperforming and we aspire to now double our business in Africa in the next four years."
SON complements GCPL's portfolio in Africa, building on its leadership position in dry hair care and hair colours in the region. The acquisition also enables GCPL to create a platform for wet hair care products in Africa and to forge a stronger presence in the $1.8 billion global wet hair care category.
"The USA market is at the forefront of innovation for hair care products and shapes global trends in this space," Gambhir explained. "Through Strength of Nature, we will be able to draw on consumer insights and product expertise that will enable us to launch more innovative products for women of African descent."
Describing the future potential of this investment, Gambhir said, "This catapults us to become one of the largest players globally, serving the hair care needs of women of African descent."