The cash and share 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,” a source said.
Another source said the Raymond Group along with its promoters will eventually hold a minority stake in the Good Glamm Group as part of the deal.
Raymond Group should spin off its consumer care business before any potential sale, one of the sources said.
“As per company policy, we do not comment on market speculation. However, to enhance shareholder value, we continue to evaluate all options available to us,” a spokesperson for the Raymond group in response to ET’s email.
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A spokesperson for the group Good Glamm 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 past 18 months.
The company, backed by Prosus (formerly Naspers) and Warburg Pincus, is also reportedly 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 club of unicorns – or companies with a valuation of at least $1 billion – after its Series D funding round in November last year.
The acquisition of Raymond Group’s consumer business, if completed, will be the second major deal in the fragrance category after global private equity firm KKR acquired a significant majority stake in Vini Cosmetics, which sells Fogg as well as other perfume and deodorant brands.
This will be Good Glamm Group’s second offline beauty acquisition after Organic Harvest, an organic beauty and personal care brand, in January.
“This gives Good Glamm Group a huge offline presence as Raymond Group has approximately 6,000 outlets,” another person said.
Raymond Group’s consumer care business, with sales of around Rs 750 crore, has recovered from the Covid-19 crisis and is now recording pre-Covid-19 sales figures, reported indicated sources.
“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 owned by the promoters, the Singhania family.
A deal of Rs 2,500 to Rs 2,800 crore means the company could free itself of its net debt.
Its net debt at the end of December was Rs 1,250 crore and is estimated to have fallen further by the end of the previous financial year, an ET analysis showed. Net sales for the first nine months of FY22 doubled to Rs 4,220 crore, while its net loss narrowed to Rs 3 crore from Rs 353 crore. Interest expense during the period was Rs 170 crore.
The deal will bode well for Raymond Ltd’s share price, which has already risen 65% in the past six months. The company’s market cap is around Rs 5,600 crore as of Monday’s close. Analysts attribute negligible value to its consumer business, although it could fetch a price of at least Rs 2,500 crore if the deal is successful.