 "FMCG")
Tata Consumer Products, the maker of Tata Tea, has announced its acquisition of Capital Foods, the company behind Ching’s Secret and Smith & Jones brands.
The buy, at an enterprise value of Rs 5,100 crore on a no cash,
no debt basis, will be carried out in a phased manner, with Tata Consumer acquiring 75 per cent of the shareholding before March 31 and the remaining 25 per cent within three years, the company said in an exchange filing late Friday evening.
In addition to Capital Foods, Tata Consumer’s board of directors also approved the acquisition of Organic India.
The company has entered into a share purchase agreement (SPA) with Fabindia for an all-cash deal valued at Rs 1,900 crore (on no cash, no debt basis), along with an additional earnout for the shareholders linked to the 2025-26 audited financials of the company.
“Capital Foods has strong umbrella platform brands with a portfolio of unique products for in-home consumption in fast-growing categories. Ching’s Secret is a market leader in Desi Chinese across its product categories — chutneys, blended masalas, sauces, and soups,”
Tata Consumer Products said in its press release.
The company further said Smith & Jones is a fast-growing brand catering to in-home cooking of Italian and other Western cuisines.
Overall, Capital Foods has either Number 1 or Number 2 positions in five large categories, Tata Consumer said, adding the overall size of the categories in which Capital Foods operates in is estimated at Rs 21,400 crore.
“We believe this is a good strategic and financial fit. It will open up significant market opportunities in the fast-growing non-Indian cuisines segment, leveraging the sales and distribution platform that we have built,” Sunil D’Souza, MD & CEO, Tata Consumer Products was quoted as saying in the release.
“The strong brand recall of Ching’s Secret and Smith & Jones, coupled with our operational strength across channels, makes us extremely confident of driving topline growth and realising cost synergies. This transaction will accelerate momentum in our business and is margin accretive to our business.”
Ajay Gupta, founder of Capital Foods said: “Together, Tata and Capital Foods can create a multinational culinary brand that includes multiple food categories. The journey ahead is going to be a giant leap for us, full of endless possibilities and definitely exhilarating!”
The acquisitions align with Tata Consumer Products' strategic intent of entering into new adjacent high-growth/attractive margin categories in the food and beverage space.
In the stock exchange filing, the estimated turnover of Capital Foods for 2023-24 is mentioned between Rs 750 crore and Rs 770 crore. Its net worth was Rs 311.5 crore, as of March 31, 2023.
The estimated turnover of Organic India for 2023- 24 is approximately Rs 360-370 crore.
Tata Consumer believes Capital Foods’ acquisition will help expand its product portfolio and further strengthen its pantry platform. There are significant synergy benefits with the existing businesses of Tata Consumer Products in areas spanning distribution, logistics, exports, and overheads.
The company also said that the completion of this acquisition is contingent upon the fulfilment of various terms and conditions specified in the SPA and the shareholders’ agreement.
According to Tracxn data, Ajay Gupta holds a 9.45 per cent stake in Capital Foods; the rest is held by General Atlantic and Artal Asia. Kotak Investment Banking and Khaitan & Co are Tata Consumer’s exclusive financial and legal advisors on this transaction, respectively.
About the Organic India acquisition, the company said it is one of the strongest organic brands spanning food & beverages and herbal & traditional supplements. It also said the total addressable market for the categories that Organic India is present in is Rs 7,000 crore in India and Rs 75,000 crore in international markets where Tata Consumer has a strong presence.
