FMCG major Dabur is set to acquire 51 per cent stake in Badshah Masala Pvt Ltd for a cash consideration of ₹587.52 crore. Dabur announced this acquisition while posting its September quarter results.
Dabur Ltd will acquire the 51 per cent stake in Badshah Masala and the remaining 49 per cent after a period of five years.
“Dabur has entered into a share purchase agreement(“SPA”) and shareholders agreement (“SHA”) on 26 October, 2022 with the existing promoters and shareholders of the Badshah Masala Pvt Ltd (Target Company) for the acquisition of 51% equity shareholding of the Target Company from its various shareholders (balance 49% to be acquired after a period of 5 years). Upon acquisition, the Company will add ground spices, blended spices, and seasonings in its portfolio. The acquisition is in line with the Company’s strategic intent of entering into new adjacent categories in the food space,” the company said in its filing.
The cost of acquisition of has been agreed at ₹587.52 crore, said the company.
“Cost of acquisition of 51 percent equity shareholding has been agreed at ₹587.52 crore less proportionate debt as on the closing date (100 percent enterprise valuation being ₹1,152 crore which translates to revenue multiple of around 4.5x and EBIDTA multiple of around 19.6x of FY2022-23 estimated financials),” Dabur added in its filing.
Dabur said the acquisition is in line with its strategic intent to expand its food business to ₹500 crore in three years and expand into new adjacent categories. This will also mark Dabur’s entry into the over ₹25,000 crore branded spices and seasoning market in India.
“Our investment in Badshah Masala will help expand this business and continue to provide unmatched quality products. This acquisition will accelerate our growth strategy as we continue to build our foods business. We intend to leverage our international market presence to grow this business globally,” said Mohit Burman, Chairman, Dabur India Ltd.
“The transaction is expected to be Cash EPS neutral in the first year and accretive thereafter. The acquisition is expected to be completed within this fiscal. As per our agreement, we will acquire the balance 49% shareholding after 5 years,” said P D Narang, Group Director Dabur India.
FMCG giant Dabur India Ltd on Wednesday reported a 2.85 per cent decline in its consolidated net profit to ₹490.86 crore for the second quarter ended September 30 from ₹505.31 Cr reported in the correposnding quarter last fiscal.
However, its revenue from operations rose 6 per cent to ₹2,986.49 crore during Q2FY23 against ₹2,817.58 crore recorded in Q2FY22.
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