Zydus Wellness Ltd, the consumer healthcare unit of drugmaker Cadila Healthcare Ltd, has received private equity commitment to buy the Indian unit of The Kraft Heinz Company for Rs 4,595 crore ($626 million) in only its second acquisition in more than a decade.
The transaction ends months of speculation on the sale of Heinz India Pvt. Ltd as the maker of malt-based health drink Complan and energy drink Glucon-D had reportedly attracted several suitors including big Indian business houses such as Tata Group and Dabur India Ltd.
Cadila, which will jointly acquire Heinz India with Zydus, said in a stock market disclosure that the transaction will be financed through a mix of equity and debt. Select private equity firms have committed to provide equity support, it said, without disclosing their names.
The deal value includes net working capital of Rs 40 crore and cash of Rs 15 crore. It doesn't include any debt. The transaction is subject to regulatory approvals and is likely to be closed by March next year.
Other than Complan and Glucon-D, Heinz India owns Nycil talcum powder and Sampriti Ghee. The four brands recorded revenue of around Rs 1,150 crore and earnings before interest, taxes, depreciation and amortization (EBIDTA) of about Rs 225 crore for the 12 months ended 30 June 2018. Following this acquisition, Zydus Wellness will have consolidated revenue of about Rs 1,700 crore, the company said.
Heinz has two manufacturing facilities, at Aligarh in Uttar Pradesh and Sitarganj in Uttarakhand. It has a network of about 800 distributors and 20,000 wholesalers across India.
"For our parent company and Zydus Wellness, science and innovation have always been the strength and we strongly believe that we will further enhance value to all these marquee brands," said Sharvil Patel, chairman, Zydus Wellness. "Our ability to merge the consumer and ethical pharma offerings to create a seamless world of wellness will unlock value for these brands," he added.
SugarFree, the flagship brand of Zydus Wellness, was launched in 1988. Its other major brands in the food, nutrition and skincare markets include EverYuth and Nutralite.
This is the second acquisition by the company. It had bought Nutralite, a premium healthy fat spread, in 2006.
Avendus Capital acted as the financial adviser to the company and Khaitan & Co acted as the legal adviser.
In another potential deal materialising in the industry, multinational companies Nestle, Unilever and Coca-Cola are said to be among suitors in the second round of bidding for GlaxoSmithKline’s consumer nutrition business in India.