Tata Consumer Products Ltd (TCPL) is reportedly in advanced talks to acquire Capital Foods Pvt Ltd, the company behind popular food brands Ching’s Secret and Smith & Jones. People aware of the matter told The Economic Times that TCPL will initially purchase a 65-70% stake in Capital Foods from its three investors, with an option to acquire the remaining stake in the future. Furthermore, the deal is expected to value the company at Rs 5,500 crore. The negotiations have been ongoing for several weeks and are said to be in the final stages.
Moneycontrol could not independently verify the report.
The stakeholders of TCPL, including Invus Group, General Atlantic, and the company’s founder chairman Ajay Gupta, had decided to sell their stake in 2022. Negotiations have been underway to determine the stake that existing shareholders will retain or if they will exit entirely, with Kotak Mahindra advising TCPL on this matter. Nestle SA and Kraft Heinz Co. were also among the contenders vying to acquire the stake.
Product portfolio
Several multinational and homegrown consumer companies, such as ITC, Hindustan Unilever, Orkla, Nissin Foods, and McCormick, have expressed interest in the sale process. The original asking price was almost $1.5 billion (Rs 12,442 crore), but it has since decreased. Capital Foods has released a variety of products with Indian flavors, including instant noodles, soups, condiments, curry pastes, and frozen entrees under its Ching’s Secret brand, as well as a variety of niche sauces and baked beans under the Smith & Jones brand. Although Capital Foods has not yet filed its FY23 numbers with the Registrar of Companies (RoC), sources close to the company expect sales to be around Rs 900 crore with a 25% EBITDA margin.
Capital Foods was founded by Gupta in 1995. Kishore Biyani, CEO of Future Group, was the first external backer of the firm. He had bought a 33 per cent stake in the company for Rs 13 crore and exited it in 2013. General Atlantic came on board in 2018.