A possible merger between the two ‘Chyavanprash’ giants Dabur and Zandu is brewing. Dabur has reportedly offered the Zandu management a price of Rs. 6800-7000 per share. Both the management’s have however denied the talks.
Zandu has a capital of Rs. 90 million (equity capital Rs.40 million) with reserves and borrowings of Rs.214 million and Rs.242 million as of March 1999. It reported a net profit of Rs. 61 million on a turnover of Rs.1156 million for FY99. Thus Dabur has put Zandu’s market capitalisation at Rs. 28 bn.
Zandu is controlled by two families the Parikhs and the Vaidyas both of which together own 56% of the equity. The company has brands such as Zandu Chyavanprash, Zandu Balm, Zandu Honey, Zandu kesarijivan etc.
The valuation of Zandu seems quite expensive. But it would definitely consolidate Dabur’s position across these segments since Zandu is Dabur’s closest competitor. Dabur itself is in the process of focusing on its core business and hiving off its unrelated ventures. This offer is a step in that direction.
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