ITC is looking to acquire a 47 percent stake in Prataap Snacks, which makes the popular “Yellow Diamond Chips”, the Economic Times reported on February 22.
Shares of Prataap Snacks surged almost 14% in early deals to hit an intraday high of Rs 1,344.65. At 9.41 am, the share was trading 8.79 percent higher on NSE/BSE at Rs 1,280.
It was in December that Moneycontrol first reported that promoters of Prataap Snacks were in discussion to sell a controlling stake in the snack makers. The report said discussions were being spearheaded by Sequoia Capital, which is a part of the promoter group and holds approximately 47 percent of the Indore-based company.
This move is seen as a strategic step by ITC to expand its presence in regional markets, leveraging Prataap's strong foothold in these areas.
Prataap Snacks also sells traditional Indian namkeens under the Avadh brand.
The decision to explore the acquisition comes after Prataap Snacks' discussions with Haldiram's, another major player in the snacks industry, fell through due to a mismatch in valuation, the ET report said. Similarly, negotiations with Bikaji Foods, another snacks company, also did not materialise.
Moneycontrol couldn't verify the report independently.
If the stake acquisition is successful, it will trigger an open offer for an additional 26 percent of the company.
Prataap Snacks made its stock market debut in 2017 but has since delivered a negative return of around 8.34 percent.
In December 2023, Prataap Snacks reported net sales of Rs 408.31 crore, an 8.08 percent increase from the year-ago period. Its net profit for the December quarter came in at Rs 10.79 crore, significant growth of 215.39 percent compared to December 2022.
ITC's strategic approach, known as the ITC Next strategy, aims to develop a future-ready product portfolio that caters to evolving consumer preferences.
With the acquisition of Prataap Snacks, ITC could leverage its strong distribution network to promote Prataap's brand portfolio, further strengthening its position in the market.
On February 21, Prataap Snacks closed 1.7 percent down at Rs 1,171 and ITC ended 0.7 percent lower at Rs 403.35.
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