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Germany-based Henkel, a consumer products company, is planning to re-enter India by exercising an option to purchase of 26% stake in Jyothy Laboratories, a local fabric whitener and detergent maker.

One of the two people with the direct knowledge of the development said, "Henkel is keen to purchase the stake and wants to exercise it before the deadline ends in March 2016.  The negotiations between the two companies have begun with three rounds of meetings between senior executives."

The other person said that, "The 26 per cent purchase by Henkel will be through an issue of fresh shares or through preferential shares which can be converted into equity shares later or a combination of both. The selling price could be in the range of Rs 500-600 per share and will be decided on mutually acceptable terms."

Two permanent invitees of Henkel are on the board of detergent maker Jyothy Laboratories. On Thursday, at the close on the BSE, shares of Jyothy Labs declined 0.8% to Rs 306.30 thereby getting a market capitalization of Rs 5,544.75 crore. The deal will allow Henkel expertise to be leveraged by Jyothy Labs. At the same time, Henkel will regain access to the Indian market. According to few analysts, Jyothy Labs is reorganizing its business.

In an email statement, Henkel media relations head Wulf Kluppelholz said, "As a matter of principle, we do not comment on any market rumours or speculations.”

Brokerage, Motilal Oswal Financial Services, research (FMCG and retail), vice-president, Gautam Duggad said, "The move will help Henkel play in India once again at a time when the consumer growth story is intact. For Jyothy, the access to better technology and research and development will help it be at the top of their game in various FMCG categories."

In 2011, a 50.97% stake in Henkel India was purchased by Jyothy Labs. The deal gave it detergent brands Mr White, Henko and Chek and even personal care products like Neem, Margo and FA. Even access was gained by Jyothy Labs to the eastern AND northern markets in India.

-Sumana