Godrej targeting Sara Lee assets for purchase

Godrej Consumer Products Ltd., India's second-biggest soap maker, said it's "aggressively" looking at acquisitions, including Sara Lee Corp.'s global household insecticides business, to expand overseas.

Godrej Consumer is seeking to acquire businesses in Asia, Latin America and Africa to reduce its exposure to the Indian market and widen its portfolio of hair color, household insecticides and personal hygiene products, Managing Director Dalip Sehgal said in a phone interview from Mumbai.

"Godrej has a good track record of previous acquisitions and a strong balance sheet," said Anand Shah, an analyst at Angel Broking Ltd. in Mumbai, who rates the stock "accumulate."

The Mumbai-based company may also buy Sara Lee's 51 percent stake in their Indian joint venture, once the Downers Grove-based company exits the household insecticides business globally, Sehgal said. Godrej may pay about 8 billion rupees ($171 million) for Sara Lee's stake in the venture, he said.

Sara Lee has been shedding units to focus on coffee and food. Procter & Gamble Co., the world's largest consumer-goods company, agreed earlier this month to buy Sara Lee's Ambi Pur brand for about 320 million euros ($459 million) to boost air- freshener sales outside the U.S. In September, Unilever NV agreed to buy Sara Lee's body-care and European detergent unit for $1.88 billion.

Raising Funds

Godrej Consumer rose 1.5 percent to close at 264.9 rupees in Mumbai trading today. The stock's 91 percent gain this year outpaced the 80 percent advance in the benchmark Sensitive Index.

The Indian company, which has board approval to raise as much as 30 billion rupees, plans to borrow 15 billion rupees initially, Sehgal said. It may get more funds by selling shares if it finds suitable acquisition targets, he said.

"We are underleveraged as a business and we have cash sitting on our balance sheet," Sehgal said.

Food inflation, near the fastest in 11 years, is the biggest concern for consumer product companies, he said. Indians spend about 70 percent of their monthly budget on food and are left with less to spend on other household items, Sehgal said.

An index of food articles compiled by the commerce ministry increased 18.65 percent in the week ended Dec. 12 from a year earlier, following a 19.95 percent gain in the previous week.