Mumbai/ New Delhi: A consortium led by Blackstone, the world’s largest private equity fund, along with Abu Dhabi Investment Authority (ADIA) and GIC of Singapore, submitted a non-binding bid late last week to acquire a controlling stake in Haldiram Snacks Food Pvt Ltd (HSFPL), the combined packaged snacks and foods business of the Delhi and Nagpur factions of the Agarwal family, said people aware of the matter.
Blackstone and its partners are keen to buy 74-76% of the company, valuing the business at $8-8.5 billion (Rs 66,400-70,500 crore). ADIA and GIC are both limited partners or sponsors of Blackstone’s global funds. If the deal goes through, it will be the largest private equity buyout in India so far.Blackstone and ADIA declined to comment. GIC did not respond to ET's email.
Haldiram CEO KK Chutani told ET, “The company has no comments to offer.”
In May last year, Chutani, former chief executive of Dabur International, was roped in as CEO of Haldiram’s, putting a professional at its helm for the first time.
Any transaction is conditional upon the successful merger that’s still under way between the Nagpur and Delhi factions as part of a plan approved by the National Company Law Tribunal (NCLT). It’s expected to get completed in the next three-four months. The Competition Commission of India (CCI) had approved the merger last April. Blackstone has also sounded out its Canadian and other Asian LPs— they may also participate if the deal talks progress or the total cheque size goes up, said the people mentioned above. But they pointed out that there’s no guarantee the non-binding bid will translate into a deal.
Bain Capital, which held extensive talks with Haldiram’s several times in the past, is also in the fray, Mint first reported on May 7.Haldiram Family Rejig
As part of the recast, the two factions of the Haldiram family split or demerged their FMCG or packaged foods business and their restaurants business into two separate entities. Subsequently, the Nagpur faction-led Haldiram Foods International Pvt Ltd (HFIPL) and Haldiram Snacks Pvt Ltd (HSPL) led by the Delhi family was merged to create a new entity--Haldiram Snacks Food Pvt Ltd (HSFPL). After the merger, the Delhi side of the family led by Manohar Agarwal and Madhu Sudan Agarwal will own 55% of Haldiram Snacks Food Pvt Ltd while the Nagpur faction led by Kamalkumar Shivkisan Agrawal will own the rest.
The third faction of the Haldiram empire, based in the east, is not involved in the merger process.
The snack food business is engaged in the manufacturing and distribution of 500 types of products such as snacks, namkeen, sweets, ready to eat and pre-mixed food, cookies, non-carbonated ready-to-drink beverages and pasta. It has operations in 100 counties, many through franchisees, including the UK, US and Japan.
It has also diversified into several sub brands such as Minute Khana, Cup Shup, Cookie Heaven and forayed into chocolates under the Cocobay brand in January. It’s expanding into retail supermarkets and quick-commerce platforms to take on incumbents such as Britannia in cookies and Mondelez and Amul in chocolates. Other smaller brands that it has acquired include Babaji Namkeen, Akash Namkeen and Atop Foods
The Rs 1,800 crore restaurant business is being kept out of the transaction.
According to people familiar with Haldiram operations, the FY24 revenue of the combined snacks business is expected to be Rs 14,500 crore with an ebitda of Rs 2,300-2,500 crore. The business has seen a compound annual growth rate of 18% in revenue over the past five years. The average ebitda margin is 14-15% though last year it improved to 17-18% on account of low commodity rates and price hikes in FY23.
Multiple Deal Attempts
Since 2016-17, several private equity firms including --General Atlantic, Bain Capital, Capital International, TA Associates, Warburg Pincus, Everstone—have been talking with the Agarwal family for a minority stake or a controlling one.
In 2018-19, for over a year, the family held negotiations with Kellogg’s–then the world’s second largest snack foods maker--for selling a controlling 51% stake at a $3 billion valuation, excluding the restaurant business, but kept changed the deal contours which led to the US company eventually walk away exasperated.
Prior to that, PepsiCo’s Indra Nooyi had courted the Agarwals, seeking a buyout. Last September, Reuters reported that Tata Consumer Products Ltd was engaging with the Agarwal family to buy a 51% stake but baulked at the $10 billion price tag. Both companies officially denied the news.
“Now the merger coming to fruition and a professional CEO on board chances of a transaction are more real than ever,” said a snack food industry veteran. “The next generation is not keen to pursue the business with the same vigour and passion and that is another trigger but the family is very finicky on a premium valuation. Finally, valuing unlocking via listing the business is also an option as the public market will value the operations much more than private equity would.”
Haldiram’s was started by bhujia maker Ganga Bishan Aggarwal in 1937 as a family-run sweets and namkeen shop in Bikaner, Rajasthan. Subsequently, Agarwal split the business among his sons into three separate divisions.
While Haldiram dominates the snacks market, other players include PepsiCo’s (Lays, Kurkure), Balaji Snacks, Prataap Snacks ( Yellow Diamond), Bikanervala, Bikaji Foods, which recently got listed, and ITC Foods, which sells chips under the Bingo franchise.
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