The huge debt of Rs 500 crore on the balance sheet of Henkel AG has forced it to lower the bid price at below Rs 35 a share for controlling stake in its company.

It is now clear that the Mumbai-based Jyothy Labs is the sole bidder for the Henkel AG's stake of 51 per cent for which it has submitted a bid between Rs 10 and Rs 35 a share.

“The price is positive for our company as the bidding war is over and it is not possible for the price to go up. While Rs 10 a share is too low, we will be not be willing to pay Rs 35 per share either. It is somewhere in between and we will disclose the bid price in a week,” said an official from Jyothy Labs.

The fact that the rest of the bidders fell out of the race for Henkel is also due to the fact that Jyothy Labs had already acquired a 14.9 per cent stake in the company.

“The rest of the FMCG players who were trying for a stake are already our competitors and would not have liked to be on the same board. Besides Jyothy's product profile is the closest to that of Henkel compared to the rest of the FMCG companies,” said the official.

Apart from this, refinancing the debt of Rs 500 crore was also an issue which most companies would not like to take into their balance sheet.

According to analysts tracking the company, “It is possible for Jyothy Labs to buy the 51 per cent stake at a discounted rate primarily due to the huge debt which is sitting on Henkel's balance sheet. Apart from this the company is already incurring losses of Rs 50 crore and does not have a strong distribution network either.”

The Henkel India stock fell by 4.95 per cent to close at Rs 40.35 on Wednesday.

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