US-based food producer and marketer Cargill has acquired the olive oil business under the brand 'Leonardo' from Dalmia Continental Pvt Ltd (DCPL). The value of the deal is not disclosed, but sources reveal that it is around $12 million (Rs 75 crore). The top line of Leonardo brand for DCPL is Rs 50 crore and industry experts feel that usually the valuation in food consumer sector happens at 1.5 times revenues, which makes the deal value at around Rs 75 crore.
With the acquisition of Leonardo, Cargill has further strengthened its position in the edible oils space in India. It also becomes one of the category leaders in olive oil segment in India. Leonardo is a leading olive oil brand in the country with annual sales volume at 3,000 tonnes, which is 25 per cent of the country's total market size. The firm offers three different types of olive oils under its the Leonardo brand—Olive Pomace Oil, Extra Virgin Oil and Olive Oil.
Cargill sells around 400 tonnes of olive oil annually in India under 'Nature Fresh' brand and this acquisition would help it consolidate its position in the premium oils segment, said Cargill India chairman Siraj Chaudhry in a media statement. Cargill India, which clocked revenues of Rs 10,000 crore in FY13, acquired major brands in the past like ‘Sunflower Vanaspati' from Wipro (in 2012) and 'Sweekar' from Marico and 'Rath' Vanaspati from Agro Tech.
Delhi-based boutique investment banking firm BMA Capital was the advisor to Dalmia on this transaction. "The category of healthy edible oils, including olive oil and its variants, has been witnessing tremendous growth. Leonardo is a marquee brand and the category leader in its space," said Rajiv Kapasi, managing director, BMA Capital.
According to BMA Capital Advisors, the size of the olive oil market (including both edible oil and massage segments) in India was estimated to be Rs 400 crore in 2012. Currently, the retail sales are dominated by pure olive oil, accounting for 65% of the sales value. The highest growth is being witnessed by olive pomace oil (mainly used for cooking) while extra virgin olive oil primarily caters to institutional demand.
In September 2012, Italian firm Nicola Pantaleo acquired 27% stake in DCPL. It has been supplying olive oil to Dalmia since 2003 and this partnership was converted into a stake-holding relationship for ensuring supply stability and offering best prices. After selling the olive oil business, DCPL will still offer a variety of products in its portfolio—Leonardo olives, Leonardo premium pasta, Leonardo pickles, Hudson Canola Oil and Clausthaler non-alcoholic beer.
(Edited by Joby Puthuparampil Johnson)