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MTR Foods emerges front runner for largest Kerala spice firm Eastern Condiments
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Bengaluru-based packaged food company MTR Foods Pvt. Ltd is set to take control of Kerala’s largest spice player Eastern Condiments Pvt. Ltd, people privy to the development told VCCircle.

The sale process with MTR, which is controlled by Norwegian conglomerate Orkla, has been initiated by US-based McCormick & Company, which holds a 26% stake in Eastern Condiments, one of the persons said.

As part of the sale process, MTR is in exclusive talks with the spice firm, the person said, asking not to be named.  

McCormick had acquired half of its 26% stake in 2010 from private equity firm New Vernon and the other half through primary infusion. Taking together both primary and secondary components, the deal worth $35 million (Rs 164 crore then) was the largest in the segment.

Earlier on Friday, The Economic Times reported that MTR was set to pick up a majority stake in the company and that the transaction would value Eastern Condiments between Rs 1,800 crore and Rs 2,000 crore ($237-$264 million at current exchange rates).

This comes after VCCircle reported last month that PE firm Warburg Pincus had emerged as the frontrunner to invest in Kochi, Kerala-based Eastern Condiments.

Earlier in November, VCCircle had reported that KKR, Advent International, General Atlantic, TPG, German scents and flavours maker Symrise and others were looking to buy a stake in the firm.

Eastern Condiments managing director Firoz Meeran had previously told VCCircle that the company was only facilitating an exit for McCormick in this transaction. “We plan to hold on to our majority stake,” Meeran had said. 

However, the latest development indicates it looks unlikely the Meerans, who own a 74% stake in Eastern Condiments, will cling to a majority stake as MTR seems to be taking control.

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

Eastern Condiments, set up in 1989 by ME Meeran in Kerala, makes and sells 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, a CRISIL credit ratings report last year said.

Eastern Condiments also has wholly-owned subsidiaries BAMS Condiments Impex Pvt. Ltd and Eastern Food Speciality Formulations Pvt. Ltd.

Spice deals

Several spice companies are in the market currently to raise either private equity capital or sell shares to a strategic player.

In January, VCCircle reported that the owners of Indore-based spice brands Pushp and Munimji were in fundraising discussions with strategic and financial investors.

In the same month, Kolkata-based spices maker Sunrise Foods Pvt. Ltd was said to be in talks with at least two companies for a stake sale in what could be one of the biggest transactions in India’s food sector.

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

In 2018, media reports said that Manjilas Group, which operates the Double Horse brand, was trying to raise private capital to fund its expansion plan.

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