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Our Bureau

Mumbai, Nov. 20 Against the backdrop of a depressed market, Fem Care Pharma is said to be on the brink of a sell-out to FMCG-major Dabur Pharma for about Rs 300 crore, almost double its market capitalisation.

The transaction is likely to be made public next week, a Fem Care source said.

Fem Care’s share price has zoomed more than 77 per cent over the last month, with the grapevine abuzz with reports of the possible acquisition of the company. It has surged 17 per cent in the last one week. This, even as the benchmark index dipped 17.33 per cent in the last one month and 11.38 per cent in a week.

The Dabur’s Chief Executive, Mr Sunil Duggal, however, said that he did not want to comment on market speculation.

Fem Care’s share price touched its all-time high of Rs 650 during intra-day trade on Thursday on the BSE and closed at Rs 645, which is a gain of 2.24 per cent over its previous close. Dabur’s share price, though, slipped 4.76 per cent on the BSE to close at Rs 75.05.

Other companies reportedly in the race for Fem Care were Marico and the Godrej Group. Marketmen said that Rs 300 crore in a bear market is a good amount for Fem Care. “Its market capitalisation is around Rs 180 crore while they are getting Rs 300 crore which is a big premium,” said Mr Bhavin Shah, a pharma and healthcare analyst with Dolat Capital Market.

Analysts said that Dabur can now enter the niche segment which Fem Care operates in and “add a new category of products to its kitty”.

“Dabur can leverage from Fem Care’s strong franchise and the latter will benefit as Dabur will definitely take them to the next level. This is a win-win strategy for both parties,” said Mr Shah.

Through this acquisition, Dabur can now consolidate in segments such as the fast-growing skin care segment and other such areas in the consumer care business. Fem Care has some popular brands such as hair removing creams, liquid soaps, and fabric care products among others. The company has also an export-oriented-unit which manufactures creams, lotions and perfumes.

Fem care reported cumulative net sales of Rs 93.75 crore for the year ended March 31, 2008. Its standalone net profit for the quarter ended September 30, 2008 jumped 84 per cent to Rs 5.49 crore.

Market experts said that one can expect many more such consolidations in the healthcare space as the current valuations opens up many good opportunities for the big companies to get a foothold into niche areas.

More Stories on : Stocks | Pharmaceuticals

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