Buyout of Paras by Reckitt Benckiser


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:

Case Code : BSTR390 For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping & Handling Charges

Themes

Merger and Acquisition / Business Strategy
Case Length : 27 Pages
Period : 2010-2011
Pub Date : 2011
Teaching Note : Not Available
Organization : Reckitt Benckiser Group Plc, Paras Pharmaceuticals Limited
Industry : Fast Moving Consumer Goods
Countries : UK, India, Global

Abstract:

United Kingdom-based consumer packaged goods giant Reckitt Benckiser Group Plc (RB) acquired the India-based OTC major company, Paras Pharmaceuticals Limited (Paras), on December 13, 2010, for US$ 726 million ( 454 million). Until a few years earlier, RB had had a relatively low contribution of revenue from the Health & Personal Care (H&PC) category. However, the acquisition of Boots Healthcare International (in 2005) and SSL International Plc (in 2010) had significantly increased its revenue from this category. The acquisition of Paras was expected to further boost its presence in the H&PC category and to strengthen RB’s position in the world’s second fastest growing economy.

Issues:

To understand various issues and challenges in Mergers and Acquisitions (M&A).

To understand the synergies and challenges associated with this buyout.

To understand the rationale behind the acquisition and discuss and debate the pros and cons of RB’s decision to acquire Paras.

To analyze whether RB’s decision to acquire Paras at 8.2 times of revenue is justified.

To explore strategies that RB could adopt to effectively integrate Paras into its businesses and realize the potential synergies.

Contents:

  Page No.
UK-Based fmcg major buys Paras 1
About Reckitt Benckiser group plc 2
Many suitors for Paras 6
The deal 8
The deal driver 9
The synergies 11
Looking forward 11
Exhibits 13

Keywords:

Mergers and Acquisitions, Acquisition, Buyout, Synergies, Globalization, Investor Relations, Emerging markets, Developing markets, India, Middle Eastern-North Africa (MENA) markets, Fast Moving Consumer Goods, Over-the-counter segment, Pharmaceuticals, Reckitt Benckiser, Paras

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