In a bid to strengthen its footprint in the fast growing Indian branded spice market and double its sales, Norwegian consumer major Orkla has announced the acquisition of a majority stake in leading southern spice maker Eastern Condiments.
The transaction which values the Kerala based firm at Rs 2,000 crore will result in Orkla picking up nearly 68 per cent stake through its wholly owned subsidiary MTR Foods, which it had acquired earlier in 2007.
As part of the deal, MTR will acquire 41.8 per cent stake from the Meeran family - promoters of the Eastern brand - and the entire 26 per cent stake held by McCormick Ingredients in Eastern Condiments.
Following the first leg, an application seeking the merger of Eastern into MTR will be filed and the merged entity will be jointly owned by Orkla and the two brother’s Firoz and Navas Meeran, with an ownership stake of 90.01 percent and 9.99 percent, respectively.
The deal is subject to approval of the Competition Commission of India.
Eastern Condiments was established in 1983 by Mr ME Meeran. For the last 12 months ending June 30, 2020, the company had a turnover of Rs 900 crore. About half of the company’s turnover is generated in Kerala, with the remaining revenue stemming equally from across India and exports.
Eastern offers a mix of non-vegetarian and vegetarian food products largely in the categories of blended and single spices. MTR on the other hand has a pure vegetarian portfolio.
Navas Meeran, chairman of Eastern Condiments said, “Orkla is known for its strong, local brands and holds leadership positions across multiple FMCG categories in several markets. Orkla has a solid track record of building leading food brands based on a strong organisational culture and company values. Together with MTR, and as part of Orkla, we will have a stronger platform for our successful operations.”
Avendus Capital was the exclusive financial advisor to Eastern Condiments, Meeran family and McCormick on the transaction.
Anshul Agarwal, executive director and co-head of Consumer, FIG & Business Services, Avendus Capital, said, “The spices industry has a long runway for growth in India, with a shift from home processed/unorganised to branded spices driven by convenience and hygiene preferences. Eastern and MTR combined, have significant synergy potential in terms of product portfolio and geography. This deal is a testament to the strong interest in branded spices from large F&B players, given the value-added nature of the product and high growth potential of the segment.”
Earlier, in July 2020, the spices segment had seen another big-ticket transaction with ITC announcing the acquisition of spices manufacturer Sunrise Foods, a market leader in Eastern India ,for around Rs 2,150 crore.
Oslo-headquartered Orkla is a leading supplier of branded consumer goods and concept solutions to the consumer, out-of-home and bakery markets in the Nordics, Baltics and select markets in Central Europe and India.
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