After more than 18 months of intense, prolonged negotiations, Singapore-headquartered global investment company Temasek has edged ahead of other private equity suitors and emerged as the frontrunner to pick up a minority stake in Haldiram Snacks Foods Private Ltd, the combined FMCG business of the Delhi and Nagpur families of the Indian multinational snacks and savoury foods giant, multiple industry sources in the know told Moneycontrol.
"Post submission of binding bids by all parties, a term sheet has been signed between Temasek and the promoters of Haldiram Snacks," said one of the persons cited above.
A term sheet is an agreement (usually non-binding) between two parties that contains the principal deal terms and conditions of a potential investment. It serves as the starting point for a detailed, definitive agreement at a later stage.
"This is a pre-IPO deal and is expected to set a valuation benchmark. The plan is for Temasek to pick up less than 10 per cent stake at a valuation of $10 billion to $11 billion for the entire firm," a second person added.
Two other persons confirmed the above and said that the target was to reach final agreements in February.
"Though this deal has progressed slowly, a lot of work has gone into it since late December, the Haldiram family members are aligned, and parties are hopeful and optimistic that it will be sealed this time. If the promoters deem fit, one cannot rule out the option of sale of additional part stake in Haldiram Snacks beyond what is intended for Temasek to other private equity players. Whether that window is exercised, remains to be seen," one of them added.
Earlier, news reports have indicated that Haldiram may look to sell up to 20 per cent stake as part of the ongoing attempt to unlock value in the firm. Other bidders in the final lap of the proposed transaction include Blackstone and Alpha Wave Global.
All the four persons above spoke to Moneycontrol on the condition of anonymity.
When contacted, Temasek declined to comment. In response to an email query from Moneycontrol, a senior Haldiram Group executive declined to comment. Blackstone and Alpha Wave Capital could not be reached for an immediate response.
To be sure, the initial discussions with multiple bidders were linked to the sale of a majority or controlling stake in Haldiram Snacks, but at a later stage, the transaction pivoted to a part stake sale.
A valuation of $10 billion to $11 billion for Haldiram Snacks translates into a range of Rs 85,700 crore to Rs 94,270 crore.
Earlier, a demerger of the FMCG business of Haldiram Snacks Private Ltd ( HSPL or Haldiram Delhi group) and Haldiram Foods International Pvt Ltd ( HFIPL or Haldiram Nagpur group) was initiated to set up a newly incorporated entity named Haldiram Snacks Foods Private Ltd (HSFPL), wherein existing shareholders of HSPL and HFIPL would acquire 56 per cent and 44 per cent shareholding respectively.
According to a February 16 report by Crisil Ratings, the Haldiram Group's product profile is "diversified, comprising snacks, namkeen, sweets, ready to eat / pre-mix food, frozen food, biscuits, non-carbonated ready to drink beverages, pasta, etc. The group has diverse presence in India and exports to various countries outside India, including the United states of America and Europe."
Meanwhile, shares of Haldiram's smaller listed peer Bikaji Foods International have risen by more than 25 per cent in the last year. The firm's market cap stood at Rs 18,230 crores at the end of day's trade on January 6.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
