McCormick & Company, the US-based global leader in spices, herbs and flavourings, is set to acquire a 26 per cent stake in the Kochi-based curry ingredient maker, Eastern Condiments.
The deal, to be signed in Bangalore early tomorrow morning, is estimated to be worth $35 million, or Rs 162 crore, according to persons in direct knowledge of the transaction.
Eastern registered a turnover of $80 million, or Rs 370 crore, last financial year. The company is the flagship arm of the Kerala-based Eastern group of companies, promoted by the Meeran family.
Navas Meeran, Eastern’s principal shareholder and director, said, “We had a clear mandate for getting a strategic investor. But nothing has happened so far.”
According to persons familiar with the development, McCormick is coming for good, marking its entry into the Indian market.
McCormick will buy out private equity fund New Vernon’s 13-14 per cent stake in Eastern, while the rest will be acquired from the promoter family. The Meerans have close to 85 per cent stake in Eastern Condiments.
The banker involved in the transaction is Avendus Capital.
Acquiring the stake in Eastern wasn’t easy for McCormick, with the latter facing tough competition from Norwegian conglomerate Orkla. Orkla is the one which acquired Bangalore-based MTR Foods in 2007 for over Rs 450 crore. Even Kerry Group, an Ireland-based food company, was said to have put its hat in the ring. But the group denied any such move.
The interest that global food majors are showing in the domestic market is not without a reason. With a population of over 1.1 billion and a GDP growth in excess of seven per cent, India is a market to be reckoned with. Global majors, hungry for growth, are all aware of it. When US-based Kraft Foods, for instance, acquired UK-based Cadbury Plc for $19.7 billion earlier this year, it was its interest in emerging markets such as India, which had prompted it to make the move.
