Buyout of Paras by Reckitt Benckiser


Buyout of Paras by Reckitt Benckiser
Case Code: BSTR390
Case Length: 27 Pages
Period: 2010-2011
Pub Date: 2011
Teaching Note: Not Available
 Price: Rs.500
Organization: Reckitt Benckiser Group Plc, Paras Pharmaceuticals Limited
Industry: Fast Moving Consumer Goods
Countries: UK, India, Global
Themes: Merger and Acquisition, Business Strategy
Buyout of Paras by Reckitt Benckiser
Abstract Case Intro 1 Case Intro 2 Excerpts

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

The case is structured to achieve the following teaching objectives

  • 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

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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