Jul 29, 2022

CCI Approves Acquisition of Controlling Stake in Forbes Enviro Solutions Limited by Lunolux Limited

On December 20, 2021 CCI approved the acquisition of a controlling stake in Forbes Enviro Solutions Limited (‘FESL’) by Lunolux Limited (‘LL’) and consisted the following steps: (i) acquisition of up to 72.56% equity stake in FESL by AI Global Investments (Cyprus) PCC Limited (‘AI Global’) through LL from Shapoorji Pallonji and Company Private Limited; and (ii) subsequent acquisition of up to 26% by AI Global (through LL) by way of an open offer under the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Pursuant to the proposed combination, AI Global through LL would acquire controlling stake in the health and safety business (i.e., business comprising the following products and services: (i) water purifiers; (ii) air purifiers; (iii) security solutions; (iv) vacuum cleaners; and (v) electric air cleaning systems) of the Eureka Forbes group (‘Health and Safety Business’).

LL is a special purpose vehicle incorporated by AI Global. AI Global operates as the investment hub for Asia for all the funds managed by Advent International Corporation (‘AI’). AI is a global private equity investor and the funds managed directly/indirectly by AI have investments in around 40 portfolio companies that generate revenue in India. One of Advent International’s portfolio companies, Culligan International (‘Culligan’) (through its subsidiaries), is engaged in the sale of water purifiers and water filters. Therefore, there existed horizontal overlaps between Culligan and FESL in the market of water purification and water filtration products in India.

FESL is presently a subsidiary of Eureka Forbes Limited (‘EFL’). FESL is engaged in the business of manufacture of water treatment plants in India. As part of its Health and Safety Business, FESL is engaged in the manufacture and sale of a range of various types of water purifiers and water filters under the brand names ‘Dr. Aquaguardd’, ‘Aquaguard’ and ‘Aquasure’. EFL is presently engaged in the manufacture of health and safety products worldwide and in India, which include water purifiers, water treatment solutions, air purifiers, electronic air conditioners and digital security solutions. EFL is the entity that presently undertakes the business activities of the Health and Safety Business of the Eureka Forbes group (which includes FESL and its affiliates).

CCI observed that horizontal overlaps exist between Culligan and FESL in the market for water purification and water filtration products in India, although it ultimately left the delineation of relevant market open as the proposed combination was unlikely to cause an AAEC in India. In its assessment, CCI noted that: (i) the combined market share of the parties in the relevant market was in the range of 25–30% for the last three financial years, however, the incremental market share was very minimal and in the range of 0–5%; and (ii) there are other significant competitors in the relevant market such as Kent, Pureit, LG, Livpure, A.O. Smilth, etc. Accordingly, CCI approved the proposed combination under Section 31(1) of the Act.




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