Tata Consumer Products announced on Friday that it has agreed to acquire Capital Foods, a packaged foods maker, at an enterprise value of Rs 5,100 crore. As part of the deal, Tata Consumer will initially acquire a 75% stake in Capital Foods, with the remaining 25% set to be purchased within the next three years, according to an exchange filing by the Tata Group company.
The acquisition, targeted to be completed by March 31, is aligned with Tata Consumer’s strategic goal of venturing into new high-growth and attractive-margin categories within the food and beverage sector. The focus of the acquisition is on Capital Foods, renowned for its Ching’s brand of sauces and various packaged foods.
Capital Foods reported a revenue of Rs 706 crore in the fiscal year 2022-23, up from Rs 574 crore the previous year, with a net worth of Rs 312 crore as of March 31, 2023. The company boasts a robust product portfolio under the ‘Ching’s Secret’ and ‘Smith & Jones’ brands, specializing in desi Chinese and in-home cooking of Italian and other Western cuisines, respectively.
Tata Consumer anticipates significant synergies with its existing businesses, encompassing distribution, logistics, exports, and overheads. The overall market size for the categories Capital Foods operates in is estimated at Rs 21,400 crore.
Tata Consumer’s MD & CEO, Sunil D’Souza, expressed confidence in the strategic and financial fit of the acquisition, highlighting the potential market opportunities in the fast-growing non-Indian cuisines segment. D’Souza expects the deal to boost business momentum and contribute positively to margins.
Kotak Investment Banking and Khaitan & Co. served as the financial and legal advisers to Tata Consumer in this transaction. Following the news of the acquisition, Tata Consumer shares closed 3.6% higher on the National Stock Exchange, reaching a lifetime high of Rs 1,165.55 during intraday trading.
Read More: