Barely two years after Japanese food chain Kagome Company Ltd acquired a majority stake in homegrown Tasty Bite Eatables Ltd, the reins of the Indian firm are changing hands. American food company Mars Inc, best known for its chocolates and pet food business, is acquiring the parent of Tasty Bite, it said on Monday.
Though the terms of the transaction were not disclosed, according to VCCircle estimates, the value of the deal would be at least Rs 1,000 crore ($150 million), given the market valuation of Tasty Bite.
The deal would also trigger an open offer for shareholders of Tasty Bite. “Tasty Bite’s broad range of dinner time products, focused on Indian and Asian cuisines, makes it a natural complement to our existing portfolio,” said Mars Food global president Fiona Dawson.
“Tasty Bite is a fast growing Indian/Asian dinner time brand. Upon closing of the acquisition of Tasty Bite, Mars Food will expand its all-natural vegetarian offerings in the US, and leverage Tasty Bite’s strong product development pipeline, flavour expertise and strategic sourcing of quality ingredients throughout its portfolio,” she added.
Mars Food has a broad portfolio of brands, including ready-to-eat and dry rice and grains, sauces, meal kits, meal helpers, and spices, under brands such as Uncle Ben’s, Masterfoods, Dolmio and Seeds Of Change, among others.
Globally Mars Inc has brands like Snickers, M&M’s and Wrigley’s, besides pet food label Pedigree. Several of these products are sold in India and Mars has direct presence in the country through its Wrigley confectionery business unit.
According to the plan, Mars Food, the Belgium-headquartered arm of Mars Inc, has signed a definitive agreement to acquire Preferred Brands International (PBI) for an undisclosed amount. PBI, a Stamford, Connecticut-based manufacturer and marketer of all-natural, ready-to-heat Indian and Asian food products, in turn, owns a majority stake in Tasty Bite.
Mars said Tasty Bite will continue to be listed after the acquisition, implying it does not expect its open offer to succeed.
Tasty Bite’s portfolio includes a wide range of vegetarian offerings, including Indian and Asian entrees, spice and simmer meal kits, and organic rice and lentils. While the majority of sales are generated in North America, PBI also manufactures products that are sold through retailers in the UK and Australia, and through foodservice in India.
It manufactures products at its Pune facility and exports a majority of its products to the US. PBI also enjoys a significant foodservice business, under which it supplies to other food manufacturers and quick-service restaurants in India. Bulk of its products is sold under the Tasty Bite brand.
In 2015, Kagome had acquired a 70% stake in PBI, to get an indirect majority stake in the firm. The remaining 30% was held by US-based consulting and venture advisory firm ASG-Omni, which had got control of Tasty Bite over 17 years ago. ASG-Omni is led by former Pepsi and Unilever executives, Ashok Vasudevan and Sohel Shikari, among others, who were involved in marketing of Tasty Bite products in the US.
It could not be immediately ascertained if ASG-Omni is also selling its stake to Mars in this transaction.
Tasty Bite’s valuation has shot up over nine times since Kagome gained control of the firm.
It saw its share price climb 9.7% to end at Rs 5,645.95 apiece on the BSE in a strong Mumbai market on Monday.
Tasty Bite’s revenues rose 21% to Rs 252 crore, with its net profit rising 41% to Rs 22.76 crore for the year ended March 2017. The firm is currently trading at almost 6 times its annual revenues.
The acquisition of PBI is subject to regulatory approvals and is expected to close by December 2017.
Morgan Stanley & Co. LLC served as the financial advisor to Mars Food. Skadden, Arps, Slate, Meagher & Flom LLP served as the legal advisor to Mars Food, and AZB & Partners served as the India legal advisor. Tasty Bite was represented by Goldman Sachs, The Giannuzzi Group, and Shardul Amarchand Mangaldas.Tasty Bite was represented by Goldman Sachs, The Giannuzzi Group, and Shardul Amarchand Mangaldas.