UPDATE 1-Brazil Hypermarcas pays $221 mln for condom makers

* Has 500 mln reais in cash for more purchases-CEO

* Focus will be on drugs, beauty care-CEO Bergamo (Recasts to add comments from CEO interview, details)

By Guillermo Parra-Bernal

SAO PAULO, Oct 7 (Reuters) - Hypermarcas (HYPE3.SA), the largest Brazilian maker of toiletries and over-the-counter medicines, agreed on Wednesday to buy two domestic condom makers for $221 million to increase its presence in Brazil's beauty care and medicine sectors, Chief Executive Claudio Bergamo told Reuters in an interview.

The acquisition will tie in with its strategy to build its brand portfolio in the personal and beauty care sectors as jobs and household income grow in Latin America's largest economy, Bergamo said.

"These are acquisitions with a strong value-added component that will start contributing to bottom line results in a relatively short period of time, by the second quarter of next year or so," Bergamo said by phone from his office in Sao Paulo.

The Sao Paulo-based company will pay $101 million in cash for control of Jontex, the leading condom brand in Brazil owned by U.S. consumer goods manufacturer Johnson & Johnson (JNJ.N). The transaction should be concluded between Jan. 4 and Jan. 31, 2010, Bergamo said.

Hypermarcas also signed a letter of intent to purchase Inal, a condom maker that owns the brand "Olla" in Brazil, for $120 million, the company said in a regulatory filing. Hypermarcas will pay up to 40 percent of that amount in cash and the rest will be paid in five annual installments, the filing said.

The market for condoms in Brazil should grow significantly in coming years as more Brazilians join the formal labor market and get better trained and paid, he said. The per-capita consumption of condoms in Brazil is 1.7 units per year, compared with 10 units in Japan and 4.5 in the United States, Bergamo said, citing a recent poll by AC Nielsen.

Hypermarcas, the product of 23 acquisitions since its founding in 2000, is betting on acquisitions to fuel growth in fast-moving consumer goods, the most dynamic segment of Brazil's economy.

Consumers helped pull Brazil out of its first recession in 17 years, and companies like Hypermarcas that rode out the crisis now looked poised to capitalize on the better times.

The company, controlled by consumer goods magnate Joao Alves de Queiroz Filho, known as Junior, has more than 500 million reais ($285 million) in cash in its coffers for acquisitions, Bergamo said. It has no plans to raise cash through bonds or loans to finance more purchases, he added.

He said the focus of further acquisitions will continue to be the over-the-counter medicine sector, where drugs are sold without medical prescription, and beauty care. Hypermarcas also sells food and household cleaning products.

The deals "represent an additional investment by Hypermarcas in the personal care segment, showing the company's firm commitment to continue growing in the sector," both filings said.

The integration of Jontex and Olla should be ready by the end of January, Bergamo said. He declined to elaborate on possible acquisition targets.

Still, analysts estimate that Hypermarcas could raise more than 1.5 billion reais to spend buying rivals, especially in the pharmaceutical and beauty care industries.

Bergamo also pledged to continue balancing growth in the organic and acquisitions segments of Hypermarcas.

Hypermarcas stock fell 1.3 percent to 34.53 reais in Sao Paulo trading on Wednesday. The stock has more than tripled this year. (Editing by Carol Bishopric)