Wipro, on Saturday, announced that it had signed a ‘definitive agreement’ to acquire the entire stake of the L.D. Waxsons Group, a Singapore-based fast moving consumer goods (FMCG) company, for a consideration of $144 million.

Waxsons, which is expected to earn revenues of about $68 million in 2012, would account for about 9 per cent of Wipro’s Consumer Care and Lighting Business. The acquisition is to be consummated in 60 days.

Acquisition funding

Vineet Agrawal, President, Wipro Consumer Care and Lighting, told this correspondent that funding of acquisition would be through a mix of internal revenues from Wipro’s FMCG business and through short or long-term loans.

“We have not yet decided on the quantum or terms of the loans,” he said. “Since our average margins are fairly high, debt would not be a problem,” he said.

The company claimed that the acquisition would result in Wipro getting a ‘leadership position’ in the facial skin care market in Malaysia and Singapore, besides giving it a foothold in China and other Asian markets.

The acquisition would bring the skin care brands Bio-essence and Ginvera, and health care brand Ebene, into the Wipro fold.

Waxsons has manufacturing facilities in China and Malaysia and a footprint in Singapore, Malaysia, Taiwan, Hong Kong and Thailand.

Referring to the acquisition of the Unza and Yardley brands, he said the Waxsons acquisition would be ‘a good strategic fit’. Observing that the Waxsons’ remedies have a significant Chinese traditional health care component, he said the acquisition would enable Wipro to take the brand to markets such as Vietnam and Indonesia where Waxsons does not have a presence now.

“The significant Chinese population in these countries will enable us to expand the market for Waxsons’ products,” he said.

Mr. Agarwal said margins would only be ‘marginally’ affected as a result of the acquisition.

The operating margin of the target company was about 10-11 per cent, compared to 11.5-12 per cent for Wipro’s consumer care business, he pointed out. The company’s consumer care business earned revenues of Rs.1,000 crore in the last quarter.

More In: Companies | Business