Packaged consumer goods firm, Hindustan Unilever Limited (HUL), on Monday said it has signed an agreement with Glenmark Pharmaceuticals Ltd to acquire its female intimate hygiene brand VWash, that will mark its entry into the category in India.
The company declined to share financials of the deal. “The consideration has been split into two parts involving an upfront cash payment upon closing of the deal and a deferred consideration over the next three years,” the company said in a media statement.
The deal includes acquisition of intellectual property rights including trademarks, design and know-how related to the VWash brand. “We are acquiring the IP and relevant brand attributes to enable us to take over this business,” the company’s chief financial office, Srinivas Phatak, told journalists over a call on Monday.
The deal does not include any manufacturing facility or employees being transferred to HUL as part of the transaction.
The transaction is subject to fulfillment of certain conditions and both parties would be working together to complete this in the next few months. Glenmark will continue to manage the business until the transaction is completed, and will also continue to manufacture for HUL for an agreed period of time, the company said in its announcement.
The move will help HUL expand its beauty and personal care category.
“The acquisition of VWash gives us an entry into the currently underpenetrated and rapidly growing female intimate hygiene segment. The brand has a leadership position and fits well into the white spaces in our beauty and personal care business,” Sanjiv Mehta, chairman and managing director, HUL, said.
In 2018-19 the company’s beauty and person care segment — that includes brands such as Lux, Dove, Sunsilk, Lakme among others — contributed to 46% of the company’s segment revenues ahead of its home care business. The category fetched 58% of segment profits for Hindustan Unilever Ltd in the financial year 2018-19, the company said in its annual report for the year.
The intimate hygiene market in India is a niche one. Category penetration stands at sub-8% in urban India, but is registering a strong double digit growth, the company said in an investor presentation. It also has fewer competitors in the market.
The rationale behind the acquisition, said Phatak was driven by the growing affluence of urban Indian shoppers who are now widening their purchase of beauty and personal care products beyond face creams and soaps.
“As India starts to get more affluent and we try and understand the needs for consumers – clearly as a category, it is poised for growth and expansion,” he said.
The brand will also give HUL further access in to the pharmacy channels — a key trade and sales route. “We will build awareness, drive penetration, and we will utilize distribution muscle and enhance play in chemist channels which is working out well for us through the GSK acquisition,” he said.
VWash, was launched by Glenmark in 2013; the brand has established itself as the market leader in the female intimate hygiene category.
The acquisition comes after the National Company Law Tribunal, in February, cleared the mega merger between GlaxoSmithKline Consumer Healthcare (GSKCH) and Hindustan Unilever that is set to solidify its position in the country’s packaged foods market.
In 2018, HUL acquired Karnataka-based Aaditya brand of ice-creams, and in 2015, added the Indulekha hair care brand to its portfolio.
This article was first published on livemint.com