Hindustan Unilever approves sale of Pureit water purification business to A. O. Smith for ₹601 crore

FMCG major 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 ₹601 crore ($72 million).

A. O. Smith India Water Products Private Ltd is a subsidiary of US-based A. O. Smith Corporation, a leading global water technology 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,” according to a stock exchange filing.

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The water purification business, which forms part of HUL’s Home Care segment, generated a turnover of ₹293 crore in the financial year 2023-24, accounting for less than 1% of HUL’s total turnover.

HUL does not separately track the net worth of the water purification business. This transaction will not affect HUL’s shareholding pattern, and the company will continue to manage the business until the transaction is completed.

The transaction is subject to customary closing conditions, and HUL will continue to manage the business until the completion of the transaction.

Rohit Jawa, CEO and Managing Director of HUL, said. “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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Parag Kulkarni, president of A. O. Smith India Water Products Private Limited, said, “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.”

Nuvama Institutional Equities called this deal marginally positive for HUL. “In our view, the water purification business is hyper-competitive and very different from a typical FMCG kind of business; it is much more of a consumer-durable kind of business.

Also, product differentiation is not easy and pricing is a key disruptor here. This move is in line with HUL’s strategic intent to focus sharply on core categories,” Abneesh Roy Executive Director & Head of the Research Committee at Nuvama said in a note post the announcement of the sale.

Shares of Hindustan Unilever Ltd ended at ₹2,618.90, down by ₹3.50, or 0.13% on the BSE.