Global billion-dollar multinational corporations engaged in personal care and consumer segments are scanning Indian nutraceutical players for bolt-on acquisitions. Early last year L’Oreal’s chief executive Jean-Paul Agon confirmed that L’Oreal was keen to acquire an Indian ayurvedic (Indian herbal solution in nutraceuticals) company, which could at best make up for not more than 5% of the business’ future sales growth in India.

A Coca-Cola source said the company is quite keen to look at relatively small acquisition targets that have expertise in nutraceuticals. The Coke source said this could be well in line with the company’s overall plan to increase its presence in the nutraceutical beverages market.

Europe-based multinationals such as Nestle and Danone have also taken an interest in nutraceuticals and functional products in the past years, a Europe-based banker said. In developed markets, functional additions pave the way to develop premium products, for example by adding vitamins to foods. However, in Asia, targets outside of foods are more likely to be smaller bolt-ons or joint ventures, which would enable multinationals to tap into local technologies.

The Korean natural gas company, with a $45 million market cap, recently realized that the Indian nutraceutical/herbal solutions space has enormous opportunities and was keen for a buyout of an Indian nutraceutical player. The Korean company had heard about Indian ace herbal solutions firm, Noida-based Biotique. Biotique is one of the most reputed brands in the Indian nutraceutical business, considering its vast line-up of personal care products and its huge success abroad, with a large pool of global celebrities vouching for that brand, an Indian banker familiar with the sector said.

—Vinu Lal and Kasper Viio, mergermarket, 3/4/08