The cash-and-stock deal, pegged at around Rs 2,500-Rs 2,800 crore, is expected to be one of the largest acquisitions in the beauty and personal care segment.
“This acquisition will mark Good Glamm’s entry into the men’s personal care and sexual wellness category,” one source said.
Another source said the Raymond Group as well as its promoters will end up owning a minority stake in the Good Glamm Group as part of the deal.
Raymond Group is expected to carve out its consumer care business before any potential sale, one of the sources said.
“As per the company policy, we do not comment on market speculation. However, to enhance shareholder value, we keep evaluating all options available to us,” a spokesperson for the Raymond Group said in response to ET’s email.
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A spokesperson for the Good Glamm Group declined to comment.
The Good Glamm Group has aggressively acquired brands such as PopXO, Baby Chakra, Mom’s Co, ScoopWhoop, MissMalini Entertainment, Sirona and St Botanica, over the last 18 months.
The company, backed by Prosus (formerly Naspers) and Warburg Pincus, is also believed to be in talks to raise $250 million at a valuation of $1.8-$2 billion, sources said.
Last year, it raised $150 million from investors led by Prosus. It counts Warburg Pincus, L’Occitane, Bessemer Venture Partners, Accel, Amazon, and Ascent Capital among its investors.
Good Glamm Group entered the coveted unicorn club – or those companies with a valuation of $1 billion or more – after its Series D funding round in November last year.
The acquisition of Raymond Group’s consumer business, if it goes through, will be the second big deal in the perfumes category after global private equity firm KKR acquired a significant majority stake in Vini Cosmetics, which sells Fogg as well other perfume and deodorant brands.
This will be Good Glamm Group’s second acquisition in the offline beauty space following Organic Harvest, an organic beauty and personal care brand, in January.
“This provides the Good Glamm Group a huge offline presence as the Raymond Group has around 6 lakh points of sale,” said another person.
Raymond Group’s consumer care business, with a topline of around Rs 750 crore, has recovered from the Covid-19 crisis and is now clocking pre-Covid-19 sales numbers, sources said.
“The Good Glamm Group will use its content-to-commerce playbook to take the Park Avenue and KamaSutra brands to the next level of growth,” one of the people said.
Raymond Ltd owns around 48% of the consumer care business through an intermediary, while the rest is with the promoters, the Singhania family.
A deal of Rs 2,500-Rs 2,800 crore means that the company could become net debt free.
Its net debt at the end of December was Rs 1,250 crore and that is estimated to have fallen further by the end of the previous fiscal year, an ET analysis showed. Net sales for the first nine months of FY22 doubled to Rs 4,220 crore, while its net loss reduced to Rs 3 crore from Rs 353 crore. Interest outgo during the period was Rs 170 crore.
The deal will bode well for the stock price of Raymond Ltd, which is already up 65% in the last six months. The company’s market capitalisation is about Rs 5,600 crore as of Monday’s close. Analysts are assigning negligible value to its consumer business even though it could fetch a price tag of at least Rs 2,500 crore if the deal is successful.