U.S. consumer goods company Colgate-Palmolive Co. has acquired a
local toothpaste maker in Myanmar, making it the biggest inbound
merger and acquisition in the Southeast Asia nation, people with
knowledge of the deal said Tuesday.
Colgate bought Laser Brand Toothpaste for around $100 million,
one of the people said. The acquisition is one of the largest
investments from an American company in Myanmar since economic
sanctions against the country were first eased in 2012, ending the
Southeast Asian country's six decades of isolation under military
rule.
Colgate follows General Electric, Coca-Cola and Gap Inc., all of
whom have restarted operations in Myanmar over the past two years,
with Coca-Cola pledging more than $200 million in investment there
over the next five years.
In a statement, the U.S firm confirmed that it has acquired the
Laser brand of toothpaste and personal care products from Shwe Ayar
Nadi Co. Ltd., a local privately-held business group. Colgate
didn't disclose deal terms.
The investment "reflects Colgate's commitment to growing its
business in this important emerging Southeast Asian country," said
a statement from the company. Colgate will acquire Laser's
manufacturing and tube forming facilities and will produce
Laser-brand toothpaste, along with importing Colgate branded goods
from Thailand.
Myanmar's opening has been lucrative for multinationals that
produce consumer goods, given the rising disposable income of
Myanmar's 51 million population. Beauty and personal care products
in the country reached a market value of $318 million last year,
according to research firm Euromonitor International, growing at a
rate of 14% since 2009. The research firm has identified Myanmar as
one of the 20 markets that will offer most opportunities for
consumer goods companies globally.
The country's market is expected to grow further. The
International Monetary Fund in a report this month estimated that
the economy will keep growing by an average of 8% in coming years,
citing increased foreign investment.
The acquisition is one of the largest of its kind in the
frontier market, where foreign multinationals have preferred to set
up joint venture companies with local firms. Last year, merger and
acquisition activity in Myanmar was valued at just $50 million,
according to analytics firm Dealogic. This included Japan's
Unicharm Corp. acquisition of Myanmar Care Products Ltd., a private
local company which produces diapers and feminine napkins, for an
undisclosed amount.
The purchase also represents one of the largest American
investments to date in the country, which has so far lagged behind
that of its competitors--including China, still Myanmar's largest
source of foreign investment. According to latest available Myanmar
government statistics, the total approved investment from American
companies in Myanmar is $243.6 million, compared with $14 billion
from China, $10 billion from Thailand and $4.7 billion from
Singapore. Colgate's acquisition will boost America's investment
portfolio in the country and possibly be a boost for the Obama
administration, which needs to prove its new commitment and support
for Myanmar's nominally-civilian, reformist government in economic
terms, analysts have said.
Consumer goods companies from other Western countries have also
started investing in Myanmar, including Danish beer giant
Carlsberg, which in 2013 formed a joint venture company in the
country to produce beer locally. The company will begin brewing
beer locally next month.
Colgate says that it will shift domestic production of Colgate
toothpaste from Thailand to Myanmar in coming years--as other
consumer companies have done--allowing the company to produce
locally for the Myanmar market, without specifying an exact
date.
Like many other Western brands entering Myanmar, the company
launched an extensive corporate-social responsibility campaign last
year before launching its investment there. Colgate printed health
education posters on the inside of their brand's cardboard
toothpaste boxes, and encouraged local retailers in far-flung
villages to display these educational posters in their shops and in
local clinics. The campaign won Colgate-Palmolive a Cannes Lion
advertising award, the first ever to be granted for a campaign in
Myanmar.
Write to P.R. Venkat at venkat.pr@wsj.com and Shibani Mahtani at
shibani.mahtani@wsj.com
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