MTR Foods acquires controlling stake in Eastern Condiments

Norwegian consumer major Orkla, through its wholly-owned subsidiary MTR Foods, said on Friday it has entered into an agreement to acquire a majority stake in Kochi-based Eastern Condiments.
The company said Orkla Foods, through MTR, has signed an agreement to purchase 41.8% ownership stake in Eastern from members of the Meeran family and 26% stake from McCormick Ingredients SE Asia in Eastern, which will give Orkla 67.8% ownership stake post the transactions.

Eastern is currently owned by the Meeran family (74%) and McCormick (26%).

The entities have agreed on a purchase price that values Eastern at Rs 2,000 crore on a debt and cash free basis, Orkla said in a statement.

ET had first reported in its May 22 edition that the deal was in advanced stages of being formalised.

“This marks a significant step for Orkla towards strengthening our footprint in core geographies. Eastern and MTR will create a solid platform in the fast-growing Indian market” Orkla president Jaan Ivar Semlitsch said in a statement.

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 and business services, Avendus Capital said: “The spices industry has a long runway for growth in India, with a shift from home processed and unorganised to branded spices driven by convenience and hygiene preferences. This deal is a testament to the strong interest in branded spices from large players.”

For the 12 months ending 30 June 2020, MTR reported a turnover of Rs 920 crore.

Following completion of the transactions, an application will be filed with the intention of merging Eastern into MTR. The merged company will be jointly owned by Orkla and the two brothers Firoz and Navas Meeran, with an ownership stake of 90.01% and 9.99% respectively, the company said.

MTR chief executive Sanjay Sharma said the Indian branded food and spice markets are growing in double digits, and that company sees positive long-term demand dynamics with increasing purchasing power and more urban lifestyles.

Eastern sells a mix of non-vegetarian and vegetarian food products in the categories of blended and single spices. MTR, on the other hand, sells purely vegetarian spices and packaged foods. “With MTR, and as part of Orkla, we will have a stronger platform for our operations,” Navas Meeran, chairman of Eastern said.