Tata Consumer Products to acquire Capital Foods and Organic India for Rs7,000 cr
15 Jan 2024
Tata Consumer Products, the consumer goods arm of the Tata Group has agreed to acquire 100 per cent shares in Capital Foods, and Organic India for a total consideration of Rs7,000 crore.
Under the deal, Tata Consumer will pay Rs5,100 crore for Capital Foods and Rs1,900 crore for Organic India.
Capital Foods is engaged in the manufacture and sale of packaged food and condiments. The company mainly sells chutney, masala, sauces, noodles and soups under the trademarks `Ching's Secret' and 'Smith & Jones.'
Tata Consumer will initially acquire 75 per cent equity shares of Capital Foods from its various shareholders, and the remaining 25 per cent within 3 years. The Rs5,100-crore acquisition will help the company to enter into new areas in the food and beverage business.
Against this, the acquisition of Organic India will cost Tata Consumer Products Rs1,900 crore. The brand, currently owned by Fabindia, is engaged in the business of manufacturing and sale of organic products, including tea, infusions, herbal supplements and packaged foods. This acquisition will help Tata Consumer expand into areas like health and wellness.
It will also benefit from Organic India’s end-to-end organic certifications, a supply chain of over 12,000 farmers and a portfolio of over 100 products in the health & wellness space. Organic India claims a domestic market volume of Rs7,000 crore and Rs75,000 crore in overseas sales.
"This transaction aligns well with Tata Consumer's overall strategic objectives and presents exciting market opportunities in the rapidly growing Health & Wellness segment. In addition, Organic India has built very strong relationships with farmers to create a robust organic supply chain with a trusted brand and a loyal consumer base," Sunil D'Souza, MD and CEO, of Tata Consumer Products, said.
"Organic India's differentiated products and robust supply chain together with Tata Consumer's distribution strength across channels in India and specific geographies globally makes us confident of accelerating momentum in the business while improving our margin profile," he added.
“Organic India works with a community of tens of thousands of farmers who work only with socially and ecologically sustainable methods. We are confident that Organic India will continue to thrive with the Tatas' leadership," William Bissell, managing director of Fabindia, said.
The acquisitions will bring in significant synergy in distribution, logistics and overheads while unlocking additional channels and new markets.
Tata Consumer Products has a market value of Rs1,07,644.58 crore. The company’s board of directors is expected to seek approval for a Rs3,500 crore rights issue to fund the two acquisitions.
