The consumer division of Tata Group is in negotiations to acquire at least 51% of beloved Indian snack food producer Haldiram, a report published in Reuters said. The snack maker had reportedly demanded a $10 billion valuation.
The Indian giant would straight away compete with Pepsi (PEP.O) and Mukesh Ambani’s Reliance Retail if a merger were to be successfully executed.
A 10% stake sale from the popular snack brand is reportedly under consideration with private equity groups like Bain Capital. Tata Consumer Products (TACN.NS) owns the United Kingdom tea business Tetley as well as collaborates with Starbucks (SBUX.O) in India. The sources informed that Haldiram generates about $1.5 billion in yearly revenue and the conglomerate resisted the $10 billion valuation.
After the news broke out, Tata Consumer shares increased more than 3% in late 6 August stock market trade. According to a third individual with firsthand knowledge of the conversations, Tata intends to purchase more than 51% of Haldiram’s shares but has informed them that their “ask is very high.”
The person mentioned that the prospective acquisition offers Tata a fascinating prospect and added, “Tata (Consumer) is seen as a tea company. Haldiram’s is huge in the consumer space and has a wide market share.” The sources required anonymity in order to speak.
Tata Consumer Products “does not comment on market speculation,” based on a spokesperson. Krishan Kumar Chutani, the CEO of Haldiram, and Bain declined to comment on the development.
The family-run Haldiram’s chain has its roots in a small shop that opened in 1937 and is renowned for its ‘bhujia’ snack which can be bought in mom-and-pop shops for a meagre Rs 10. According to Euromonitor International, its market share in India’s $6.2 billion savoury snack market is approximately 13%. Pepsi, known for its Lay’s potato chips, has about 13% as well.
Snacks by Haldiram are now offered in international markets like Singapore and the United States. The company operates 150 restaurants that serve regional fare, sweets along western food.
Ankur Bisen, head of consumer and retail at Indian consultancy Technopak remarked, “If you want to suddenly grow big in size, no one better to provide access than Haldiram’s. No other brand attacks packaged food, and food services, with equal panache.”
The consumer division of Tata, which also distributes salt, lentils and mineral water, generated $1.7 billion in revenue during the most recent fiscal year. It is a minor component of the Tata Group, which includes companies in the car, aviation, and hotel industries and generated combined sales of over $144 billion in 2022.
Manohar Lal Agrawal, the chairman of Haldiram, stated in an interview last year that the business aimed to draw in private equity investors and make its stock market debut in two to three years.
A minimum of $981 million in sales was generated by Haldiram in the fiscal year that ended in March 2022, as per regulatory filings for the company which has numerous registered firms throughout the nation. However, in accordance with the first two sources, its yearly operating profit is roughly $200 million and its revenue has now reached close to $1.5 billion.
