Zydus Wellness and its parent Cadila Healthcare will jointly buy Heinz India in a deal worth Rs 4,595 crore.
The two companies have signed definitive agreements to buy Heinz India, a subsidiary of Kraft Heinz, a regulatory filing said on Wednesday.
The acquisition of popular brands such as Complan, Glucon-D, Nycil and Sampriti Ghee from Heinz India would be part of the deal, Cadila Healthcare said in a filing to the Bombay Stock Exchange.
Zydus will finance the deal, which is expected to add to earnings, through a mix of equity and debt and plans to close it in the fourth quarter of the current fiscal year.
“Select leading private equity firms have committed to partnering the transaction by way of equity support,” it added.
Before closing the deal, Kraft Heinz will carve out its ketchup, tomato sauce and mayonnaise business.
Complan, along with GlaxoSmithKline’s health drinks brand Horlicks, was very popular until about a decade ago, when consumers used these products for supplemental nutrition along with milk.
Their popularity has since waned, with sales growth slipping, as consumers grew wary of the sugar content in these products and the health claims made by these brands.
“The sale of this niche business fits into our overall global growth strategy and our focus on investing in and growing brands within our core categories,” Kraft Heinz chief executive Bernardo Hees said in a statement.
Glaxo’s Horlicks is also up for sale and media reports suggest Nestle, Unilever and Coca-Cola are among the bidders for the business that could fetch more than $4 billion.
For Zydus Wellness (ZWL), the deal will boost the quality of its portfolio, particularly in the core business of health food and nutrition. The company, which already has brands like Sugar Free and Nutralite, the addition of Complan and Glucon-D, is expected to strengthen its equity in the consumer wellness segment. Further, its range of skincare products under “Everyuth” is also expected to be complimented with the inclusion of Nycil.
Apart from the four brands, ZWL will also get two large manufacturing facilities in Aligarh and Sitarganj and teams devoted to operations, research, sales, marketing and support. Heinz India has a strong distribution network of over 800 distributors, more than 20,000 wholesalers covering 29 states.
Among these brands, Heinz India recorded revenues of about Rs 1,150 crore for the 12 month period ended June 30. Following this acquisition, Zydus Wellness will have consolidated revenues of about Rs 1,700 crore.
“This development offers immense opportunity to broaden our portfolio and invest in brands and products that we believe are most relevant to health conscious consumers. This acquisition will be an ideal addition to Zydus Wellness, supporting our aspirations to grow in the consumer wellness space by providing multiple choices to consumers,” Sharvil Patel, chairman, Zydus Wellness, said while commenting on the deal.
The Telegraph
