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Essel Propack acquires 75.1% stake in German venture

BS Reporter / Mumbai 21 Sep 16 | 02:42 PM

Essel Propack Ltd, a global leader in laminated plastic tubes catering to the FMCG & pharma space, announced on Wednesday 75.1 per cent stake in Essel Deutschland Germany (EDG) at an enterprise value of US$ 32 million (Rs 214 crore).


The company had already acquired 24.9 per cent earlier in EDG. With the current buyout, therefore, EDG will be a 100 per cent subsidiary of Essel Propack.

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The acquisition will help Essel unlock synergies such as enhanced cross selling opportunity in the German markets, sourcing flexibility and better capacity utilisation at all of its Europe plants.


"The acquisition of EDG will further enhance our position in the non-oral care category. This move is in keeping with our overall plans for achieving revenue growth of 15 per cent and net profit growth of 20 per cent and achieving our mission set for 20:20:20 (EDITA margin of 20 per cent, return on equity (ROE) at 20 per cent and return on capital employed (ROCE) at 20 per cent within two years) ," said Ashok Goel, Vice-Chairman & Managing Director of Essel Propack.


After hitting 52-week high at Rs 245.20 apiece, Essel Propack stock declined on profit booking to trade currently at Rs 230.95 apiece on the Bombay Stock Exchange on Wednesday.


Essel now can deploy its proven capability to offer high decoration laminated tube solutions for the premium non oral care brands across Europe, including Germany. 


Essel will also have the benefit of a long term supply agreement which EDG has recently signed with a local oral care company.


The EDG revenue of approximately $40 mn will now be consolidated in Essel's global revenue and will boost consolidated revenue by 11 per cent. 


In FY16, Essel Propack's consolidated revenue stood at Rs 2,184 crore.


Ram Ramasamy, Global COO, Essel Propack, said, "The complete buyout will enable us to step up productivity and efficiencies to those of other Essel Propack plants and improve overall profits."


"This move will help us to creating a strong platform for growth in Europe especially in the non-oral care category. As we have a ready customer base, this will help improve our revenue growth through synergies. The acquisition will add 63 per cent to our Europe revenue on an annualised basis," said Alan Conner, European Business Vice-President of Essel.


 

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