The deal, one of the largest M&A transaction in recent times, offers Zydus access to brands such as Complan, Glucon D, Nycil and Sampriti Ghee, including two manufacturing facilities and a nationwide strong distribution network
Zydus Wellness, a part of the Ahmedabad-based Zydus Group, said on November 2 that it will be funding two-thirds of the Rs 4,595 crore Heinz India acquisition through equity and the remaining via debt.
The management didn’t provide details of the deal structure. But some leading private equity firms will be partnering the company by way of equity support. There are indications that parent Cadila Healthcare will pump in Rs 1,000 crore to fund the deal.
“The management will provide certain options to the board and additional details will be shared once we are able to discuss with the board and get clearances,” said Sharvil Patel, Chairman of Zydus Wellness, in an investor call.
Zydus Group last week entered into a definitive agreement to acquire privately held Heinz India, jointly with parent Cadila Healthcare, at a valuation of Rs 4,595 crore.
The deal, one of the largest M&A transaction in recent times, offers Zydus access to brands such as Complan, Glucon D, Nycil and Sampriti Ghee, including two manufacturing facilities and a nationwide strong distribution network.
The transaction is expected to be finalised in Q4 FY19, subject to regulatory approvals.
Hinting at the strategy of growing the brands, especially Complan, Patel said Zydus will focus on segmentation, penetrate deeper through rural expansion and invest aggressively on promotions.
“The largest brand among the four is Glucon-D. However, the biggest potential for turnaround is in Complan. We see multiple opportunities for these brands. The legacy of all of these products is pharmaceuticals and they have been strong problem-solution innovative products developed by erstwhile Glaxo. There is potential to bring science and innovation into many of these brands, specifically Complan,” Patel said.
He feels the whole health food drinks (HFD) category has been challenged because in the last couple of years companies are looking to divest. “We see suppression of promotional spends. Brand recall levels are over 90 percent. There is tremendous understanding of the products and very limited penetration. For Complan, the whole segmentation has not been done, like others in the industry,” Patel added.Zydus, he said, sees significant scope for segmentation, catering to different age groups and their needs. "Given our strengths in innovation and science, we can tailor made products with enhanced science," he added.