Orkla, the Nordic food group, has struck a deal to acquire India-based business Eastern Condiments.
In a statement today (4 September), Orkla said its unit in India, MTR Foods Private, has entered agreements to acquire 67.8% of Eastern Condiments – a 41.8% stake from the Meeran family that are the majority shareholders of Eastern Condiments and the full 26% in the hands of US-based spices maker McCormick & Co.
Once those share transactions have been completed, Norway-headquartered Orkla, which had been linked to interest in buying Eastern Condiments earlier in the year, plans to merge Eastern Condiments with MTR. Orkla will then own 90.1%, while the Meeran brothers Firoz and Navas will hold 9.99%.
“The parties have agreed on a purchase price that values Eastern (100%) at INR20bn,” Orkla said, which equates to US$273.5m.
“The merged business will create a solid base for future growth in the Indian branded food market, driven by the positions of Eastern and MTR in spices and packaged food categories,” the statement read.
Eastern, based in the city of Kochi in the state of Kerala, is predominately engaged in blended and single spices. The company has seven production plants in four different Indian states employing almost 3,000 people. It also supplies pickles, snacks, breakfast items and frozen vegetables.
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In the financial year through June, it generated revenues of INR9bn, half of which comes in from Kerala, and EBITDA profits of INR1.1bn.
Navas Meeran, the chairman of Eastern, said: “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.”
MTR been a part of the Orkla group since 2007, and exports to 32 countries from its two manufacturing facilities in the states of Bangalore and Maharashtra. Since then, Oslo-listed Orkla has made other acquisitions in India, most recently in 2018 with FirmRoots, a start-up that makes nutritional snacking products for children.
“This announcement marks a significant step for Orkla towards delivering on its strategy to strengthen our footprint in our core geographies,” said Orkla president and CEO Jaan Ivar Semlitsch. “By joining forces, Eastern and MTR will create a solid platform in the fast-growing Indian market, based on strong local brands.”
Still, the deal for Eastern is subject to clearance from India’s Competition Commission, while the proposed merger could take 15 months to complete after the initial share purchases have been sealed, Orkla added.