Marico buys Paras personal care brands from Reckitt Benckiser

Marico has bought the personal care business of Paras Pharmaceuticals from UK consumer goods giant Reckitt Benckiser, edging out Emami.

But two industry officials familiar with the negotiations said the maker of parachute hair oil has paid Rs 600-650 crore for the privately-held Paras Pharma's personal care brands such as Zatak deodorant, Set Wet hair gel and Livon hair serum.

This is much lower than Reckitt Benckiser's original demand of Rs 900 crore, they said.

The transaction will involve demerging the personal care business of Paras Pharma into a separate company, Halite Personal Care India, in which Marico will acquire 100% stake. This will involve transfer of all key assets, including intellectual property rights, supply agreements and third-party manufacturing agreements.

Marico will fund the acquisition through a mix of internal accruals, equity and debt.

Reckitt Benckiser acquired Paras Pharma in December 2010 for Rs 3,260 crore, in one of the biggest acquisitions in the Indian consumer goods sector.

With the new deal, it will get six brands - Set Wet, Livon, Zatak, Eclipse, Recova and Dr Lips - expected to have a turnover of more than Rs 150 crore in FY12. Paras brands are among the top three in the hair gel, male deodorant and hair serum categories.

According to industry estimates, the deodorant category is growing at a rate of 40% a year, hair styling gel at 25% and hair serum at 30%.