FMCG Giant Hindustan Unilever Ltd – HUL on Monday July 15 said its board approved the sale and divestment of the company's water purification business to A. O. Smith for Rs.601 crore ($72 million).
According to the stock exchange filings of the company, “The Board of Directors has approved the sale and divestment of the company's Water Purification business carried under the brand ‘Pureit’ including the trademarks, copyrights and other intellectual properties and identified assets and contracts associated with the business, as a going concern on slump sale basis, to A. O. Smith India Water Products Private”.
A.O Smith India Water Products Private limited is a wholly subsidiary of prominent global water technology firm - US-based A.O. Smith Corporation.
The Home care segment which is a HUL’s water purification business has produced a revenue of Rs.293 crore in the fiscal year 2023-2024, allotting for less than 1 percent in total income and turnover of HUL.
Hindustan Unilever Limited – HUL does not distinctly track the valuation of the water purification business. This significant transaction will not create impact on the shareholding pattern of HUL and the venture will persist to handle the business until the completion of the transaction.
As per the industry analysts, the strategic deal is slightly benefit for HUL as the business of water purification is highly competitive and more connected with consumer durables and demands than the conventional products in the FMCG sector that imposes challenge in pricings and differentiations among diverse products. Directly, the sale nurtures the the strategic focus of HUL on its key categories.
“We believe the addition of Pureit will strengthen our leadership position as a global supplier of premium water treatment products and will double our market penetration in South Asia. The acquisition will also support our corporate strategy by enhancing our premium product portfolio and distribution capabilities,” said Kevin J. Wheeler, chairman and chief executive officer.
“The Pureit brand, known for innovative water purification products, strong brand recognition and dedication to customer service, complements A. O. Smith’s geographic and channel presence. The Pureit team’s deep understanding of consumer needs and water treatment expertise adds tremendous strength to A. O. Smith in India and we look forward to welcoming the Pureit team to the A. O. Smith family,” said Parag Kulkarni, president of A. O. Smith India Water Products Private Limited.
Rohit Jawa, chief executive officer and managing director of Hindustan Unilever Limited, commented, “This move is in line with our strategic intent to focus sharply on our core categories. Pureit provides essential water purification solutions to millions of loyal consumers, and I am confident the brand will thrive further under the ownership of A. O. Smith.”
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