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Norway’s Orkla to take control of Eastern Condiments, merge with MTR Foods
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Norwegian consumer goods maker Orkla has decided to acquire a majority stake in Eastern Condiments Pvt. Ltd and merge it with wholly owned unit MTR Foods Pvt. Ltd in a deal that will help it double its sales in India.

Orkla, through MTR, will buy a 67.8% stake in Eastern Condiments from its promoter Meeran family and US-based McCormick & Company at a valuation of Rs 2,000 crore. This implies a deal value of Rs 1,356 crore ($185 million).

The acquisition comes 13 years after the Norwegian food giant acquired MTR to enter India. Since then, MTR’s revenue has grown five-fold. The takeover of Eastern Condiments, the largest spices company in Kerala, will strengthen Orkla’s position in India’s branded food products market.

“By joining forces, Eastern and MTR will create a solid platform in the fast-growing Indian market, based on strong local brands,” Jaan Ivar Semlitsch, Orkla’s president and CEO, said in a statement.

As per the deal, Orkla will buy a 41.8% stake in Eastern Condiments from the Meeran family and 26% from McCormick. The promoters, brothers Navas and Firoze Meeran, will retain 32.2%.

McCormick had acquired half of its 26% stake in 2010 from private equity firm New Vernon and the other half through primary infusion for a total of $35 million (Rs 164 crore then).

Orkla said it will subsequently merge Eastern Condiments with MTR. The Norwegian food giant will own a 90.01% stake in the merged company while the two brothers will hold the rest. Orkla may take full ownership over time.

The deal is subject to the approval of the Competition Commission of India. The merger process is likely to take about 15 months after completion of the acquisition, Orkla said.

Avendus Capital acted as the financial adviser for the transaction.

MTR, Eastern Condiments

Sanjay Sharma, MTR’s CEO, said the company and Eastern have a strong combined portfolio of complementary products, an “attractive geographical presence” and good export potential.

MTR offers breakfast mixes and ready-to-eat meals, beverages, spices, pickles and sweets. It has recently taken to online retail and tied up with food aggregators to ensure product deliveries to customers during the lockdown.

MTR also exports to 32 countries, with North America, Australia and New Zealand being the major markets. 

The company employs more than 1,000 people and has factories in Bengaluru and Pune. For the 12 months through June 2020, MTR had revenue of Rs 920 crore. Karnataka accounts for half of its revenue.

Kochi, Kerala-based Eastern Condiments was set up in 1983 by ME Meeran. It makes spices, blended spice powders, pickles and rice-based products. The group is also engaged in rubber re-treading, construction, mattress and ready-made garments businesses.

For the 12 months through June 2020, the company recorded revenue of Rs 900 crore and normalised earnings before interest, tax, depreciation and amortization of Rs 110 crore. Kerala accounts for half of its sales. Other Indian states and exports contributing the remaining half equally.

Spice deals

Several spice makers have raised funding either from financial investors or strategic players in the recent past.

In June, venture capital firm A91 Partners invested Rs 125 crore in the company behind spice brands Pushp and Munimji

In May, biscuits-to-cigarettes maker ITC Ltd inked an agreement to acquire Kolkata-based packaged spices maker Sunrise Foods Pvt. Ltd in one of the biggest deals in the Indian food sector.

In October 2019, Intergrow Brands Pvt. Ltd, a subsidiary of spices maker Synthite Industries Pvt. Ltd, raised $11.3 million from Bahrain-based alternative investment firm Investcorp.

Also read: Sector watch: Investors salivate over spices but are prospects that mouth-watering?

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