Welspun India Ltd has announced the following Press Release…………………………. ………………..
“Welspun India Ltd., part of the US $ 1.5 billion Welspun Group and amongst the top 4 terry towel manufacturing companies in the World has acquired 76% interest in bath rug major Sorema - Tapates e Cortinas de Banho, SA (Sorema) of Portugal at an enterprise value of Rs 600 Million.
It is worthy to mention here that Welspun acquired 85% of UK’s largest Towel Company Chirsty in July 2006 and has increased the business significantly in just more than a year’s time.
Set up in 1974 with more than three decades of experience, Sorema is a leading player in bath rugs and shower curtains around the world with an annual estimated turnover of € 10 million (INR 570 million) in FY 07. With its network across 44 countries, USA, England, Spain and Germany constitutes 78% of Sorema’s export.
The Company and Sorema additionally signed an agreement for marketing of products exclusively in Spain and Portugal and on best-effort basis in other European countries. With this new relationship, Welspun will have facilities in India, Mexico, Portugal and in UK.
Synergistic Benefits of the proposed acquisition ………………………………………….
The Board of Welspun and Sorema both believe that this relationship will realize significant synergistic benefits for both businesses considering their complementary strategies and business profiles. These would include:
Stronger brand presence……………………………………………
- Access to premium and high-end Sorema brands which could be extended to other home products.
- Sorema brands along with Welspun’s owned and licensed brands (like Nautica and Umbra) and Christy, enhances presence in branded business.
- Extension of Sorema brands to the Indian consumer through Welspun Retail Ltd.
Enhancement in market presence……………………………………….
- Complimenting Welspun’s strong presence in US and UK with pan-European presence.
- Sorema’s marketing channels could be utilized for marketing Welspun products
- Welspun’s and Christy’s marketing channels to be used for marketing existing Sorema products
Extension of product offerings………………………………………….
- Welspun is already a force to reckon with in Towels, Bed Linen and Decorative Beddings………………………..
- Sorema products in Bath Rugs and Shower Curtains will enable a complete offering to the customer……………………….
- Resulting in Coordinated sales of Bed Sheets, Towels and Rugs…………………………..
- Enable New production facilities of bath rug in India…………………
- With this new relationship, Welspun will have facilities in India, Mexico, Portugal and in UK.
Knowledge Enhancement and sharing ……………………………….
- Sorema’s experience and knowledge in marketing high value products in the European markets.
- Sorema’s experience and know-how of Bath Rug business…………………………..
- Utilization of combined knowledge and expertise of Welspun and Sorema
- Synergies in reducing market expenses……………………………………
Management synergies ………………………………
- Achieve economies of scale in administration & marketing and also reduced inventories.
Mr. Mandawewala, Joint Managing Director of Welspun India Ltd and now new Chairman of Sorema said: “With the acquisition of Sorema, we are today entering into the European market propelling us as one of the top players in the Home Textiles segment. We are looking at leveraging their know-how through product development and marketing skills, combined with both Welspun and Christy knowledge thereby creating a platform for growth and strengthen all competitive positions”.
As part of the acquisition, the existing Sorema management will continue to own the remaining 24% of the issued share capital and will operate Sorema on a stand-alone basis, with the exception of Mr. Rajesh Mandawewala (Joint Managing Director of the Company), who is being appointed Chairman of Sorema by the Welspun board. As a consequence of the acquisition, Sorema is a subsidiary of Welspun and all current employees will continue with the same terms and conditions of employment.
The Welspun Group engaged Ernst & Young (India) to carry out the due diligence of the Company……………………………….