Tata Consumer Products on January 12 said it will acquire up to 100 percent stake in Organic India, a Fabindia-owned business that sells tea, infusions, herbal supplements and packaged foods, for Rs 1,900 crore in an all cash deal.
"The Board of Directors approved the acquisition of up to 100 percent of the equity share capital of Organic India Private Limited. The company, thereafter, has entered into a share purchase agreement (SPA) with Fabindia Limited to acquire up to 100 percent of the company’s equity share capital,” Tata Consumer Products said in an exchange filing.
On December 19, Moneycontrol was the first to report that Tata Consumer had edged ahead of rival suitors like ITC and emerged as the front-runner for the deal.
The announcement came shortly after Tata Consumer Products' first acquisition of the day, where it said it will buy 100 percent stake in Capital Foods, which markets its products under Ching’s Secret and Smith & Jones brands, for Rs 5,100 crore in an all cash deal.
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Estimated turnover of Organic India for FY24 is approximately Rs 360 crore to Rs 370 crore. In the last three fiscals, the company has seen a gradual decline in sales from Rs 394.8 crore in FY21 to Rs 324.4 crore in FY23.
The deal values the company at a little over five times its FY24 sales. Against FY23 sales, the company is valued at nearly six times its sales. Tata Consumer is valued at 12 times its FY23 sales and 11.5 times its FY24 (annualised) sales.
The Total Addressable Market (TAM) for the categories that Organic India is present in is Rs 7,000 crore in India and Rs 75,000 crores in international markets where Tata Consumer has a strong presence, teh company said.
Organic India is a brand with a geographical footprint covering over 48 countries, substantially from India and the USA. Its product portfolio spans premium and high growth categories focused on sustainable living.
“This transaction aligns well with Tata Consumer’s overall strategic objectives and presents exciting market opportunities in the rapidly growing Health & Wellness segment,” said Sunil D’Souza, MD & CEO, Tata Consumer Products.
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