The FMCG major on Tuesday announced that it will acquire 100% stake in Sproutlife Foods (SFPL), engaged in the manufacture and sale of health food brand 'Yoga Bar' for over a period of three to four years.
Sproutlife Foods is a start-up engaged in the business of manufacturing and selling food products under the trademark 'Yoga Bar'. Yoga Bar has a product portfolio, including nutrition bars, muesli, oats and cereals. It currently has a high salience of online sales, with growing presence in offline stores. It had a turnover of Rs 68 crore in financial year 2021-22.
In an exchange filing, ITC said that it has signed a binding term sheet on 16 January 2023, to acquire 100% of the share capital (on a fully diluted basis) of Sproutlife Foods in one or more tranches.
According to the company, it will acquire 100% of SFPL over a period of 3 to 4 years. By 31 March 2025, the company will acquire 47.5% stake in SFPL in tranches, and the balance stake will be acquired, basis pre-defined valuation criteria, subject to other conditions agreed to in the binding documents.
The company will initially invest Rs 175 crore by acquiring 39.4% stake in SFPL by 15 February 2023 or such other later date as may be mutually agreed upon.
Further infusion of Rs 80 crore will be made through primary subscription, in one or more tranches, by 31 March 2025 or such other later date as may be mutually agreed upon, based on pre-agreed pre-money valuation.
The balance stake will be acquired by ITC based on the pre- agreed valuation criteria within 3 months of Sproutlife providing its financial results for the year ending March 2026.
With this acquisition, ITC is fortifying its presence in the Rs 45,000 crore, fast growing, nutrition-led healthy foods space. ITC said this investment is in line with the 'ITC Next' strategy articulated by chairman Sanjiv Puri that focuses on building a future-ready portfolio of products that serve evolving consumer needs.
In line with the strategy to augment the company's future ready portfolio, the proposed acquisition will strengthen and expand its reach with innovative food products for health conscious consumers, said the company.
Yoga Bar is expected to be rapidly scaled up, leveraging ITC's enterprise strengths in areas such as sales & distribution, sourcing, product development, and digital, the FMCG company stated in the press release.
Hemant Malik, divisional chief executive, foods division at ITC, said, "We believe that this investment is an exciting opportunity that aligns with ITC's Foods Business' aspiration to build a formidable portfolio in the nutrition-led healthy foods space. We look forward to scaling the Yoga Bar brand offering superior and healthy consumer choices. Within a short span of time, Yoga Bar has established itself as a leading brand in the healthy foods space, driven by impactful market positioning and a range of innovative products."
Suhasini Sampath Kumar and Anindita Sampath Kumar, co-founders of SFPL, said, "We are delighted to join hands with ITC in Yoga Bar's next phase of growth. ITC has a long history of building world-class brands, leveraging its core competencies which encompass superior understanding of the consumer, strong backward linkages with agri supply chain and a deep and wide distribution network. We are delighted that ITC and Yoga Bar will work together to build one of the largest brands in the healthy foods space."
ITC is a diversified conglomerate with businesses spanning fast-moving consumer goods, hotels, paperboards and packaging, agribusiness and information technology.
The company's standalone net profit rose 20.8% to Rs 4,466 crore on 27.4% increase in net revenue to Rs 15,976 crore in Q2 FY23 over Q2 FY22.
Shares of ITC were up 0.59% to Rs 334.25 on the BSE.
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