TCPL in final talks for 65-70% stake in Capital Foods
Tata Consumer Products Ltd (TCPL) is reportedly in the final stages of negotiations to acquire 65-70% of Capital Foods Pvt Ltd, known for Ching's Secret and Smith & Jones brands, at a valuation of Rs. 5,500 crore. TCPL will initially purchase the stake from three investors, with an option to acquire the remaining stake in the future. The sale process has attracted interest from several multinational and homegrown companies, including ITC, Hindustan Unilever, Orkla, Nissin Foods, and McCormick.
Stakeholders' decision to sell and contenders for acquisition
The stakeholders of TCPL, including Invus Group, General Atlantic, and the company's founder chairman Ajay Gupta, decided to sell their stake in 2022. Negotiations have been underway to determine if existing shareholders will retain a stake or exit entirely. Kotak Mahindra is advising TCPL on this matter. Nestle SA and Kraft Heinz Co. were also among the contenders vying to acquire the stake. The original asking price was almost $1.5 billion (Rs. 12,455 crore), but it has since decreased.
Capital Foods product portfolio and financials
Capital Foods offers a variety of products with Indian flavors under its Ching's Secret brand, including instant noodles, soups, condiments, curry pastes, and frozen entrees. The company also produces niche sauces and baked beans under the Smith & Jones brand. Although Capital Foods has not yet filed its FY23 numbers with the Registrar of Companies (RoC), sources close to the company expect sales to be around Rs. 900 crore with a 25% EBITDA margin.
Capital Foods' history and previous investments
Founded by Ajay Gupta in 1995, Capital Foods received its first external backing from Kishore Biyani, CEO of Future Group, who bought a 33% stake in the company for Rs. 13 crore and exited in 2013. General Atlantic joined as an investor in 2018. The acquisition of Capital Foods by TCPL is expected to strengthen its position in the Indian consumer market and expand its product offerings.
