Bangladeshi conglomerate ACI Limited is going to terminate a nearly 20-year-old joint venture agreement with India-based Dabur International.
Under the agreement signed in July 2003, the two companies formed Asian Consumer Care Private Limited the same year for selling Dabur's products across Bangladesh.
Dabur and ACI hold 76% and 24% stakes, respectively, in the company.
As per the ACI board's decision, it will sell its stake in the Asian Consumer at Tk60 crore.
The board has also decided to spend the fund on business expansion.
However, officials at ACI Limited have declined to make any comments when the termination will come into effect.
Meanwhile, Dabur has filed a statement with the National Stock Exchange of India.
"Dabur International and Dabur (UK) Limited, both wholly-owned subsidiaries of Dabur India Limited, have decided to purchase 8,479,187 equity shares and 1,000 equity shares, respectively, of Asian Consumer Care Private Limited," read the statement.
Dabur will acquire the ACI holdings for Tk60 crore which, according to the present exchange rate, comes to around Rs51 crore, the filing added.
According to the ACI website, segments like toothpaste, shampoo, and homecare saw rapid growth in FY2019-20.
Due to regional complexities and strong competitive market dynamics, Asian Consumer's revenue declined by 13.2% in FY2019-20.
According to ACI sources, Dabur's brand has not been established in Bangladesh even though the business started in 2003. Rather, there was a disagreement with Dabur in terms of business management. So ACI is severing ties with the company to focus on its own business. But Indian companies like Marico are faring well after starting their business in Bangladesh almost at the same time.
Besides, ACI Limited will merge the plastics business. The company said that it will complete the merger after getting the approval of the High Court.
ACI shares closed 0.9% higher at Tk279.10 on the Dhaka Stock Exchange on Thursday.
Currently, ACI has four joint venture companies with foreign partners including Asian Consumer.