The Competition Commission of India (CCI) has given the green light to Authum Investment & Infrastructure and Mahi Madhusudan Kela for their acquisition of a 72.8% stake in Prataap Snacks Limited. Prataap Snacks is an Indian snack food company known for its brands Yellow Diamond (chips) and Rich Feast (sweet snacks). The acquisition involves two steps:
- Initial acquisition: Authum Investment and Mahi Madhusudan Kela will acquire a 46.85% stake from existing private equity investors for Rs 846.60 crore.
- Open offer: Following the initial acquisition, an open offer will be made to public shareholders to acquire an additional 26% stake at Rs 864 per share.
Prataap Snacks will continue to be listed on the stock exchange after the acquisition. This indicates that the company will maintain its current operations and brands, with the new investors potentially influencing future strategy and growth.
Key Insights:
- This acquisition signals confidence in the Indian snack food market and Prataap Snacks’ growth potential.
- Authum Investment and Mahi Madhusudan Kela likely see value in Prataap Snacks’ established brands, distribution network, and market share.
- The open offer provides an exit opportunity for existing public shareholders who wish to sell their shares.
- The acquisition could lead to changes in Prataap Snacks’ management, strategy, or expansion plans.
Investment Implications:
- For Prataap Snacks’ shareholders: The open offer price of Rs 864 per share represents a premium to the recent market price, providing an opportunity for profit. However, investors should carefully evaluate the company’s future prospects under the new ownership before deciding whether to tender their shares.
- For investors in the snack food sector: This acquisition could spark renewed interest in the sector, potentially benefiting other listed companies like Balaji Wafers and DFM Foods.
- For the broader market: This deal reflects the ongoing consolidation trend in the Indian FMCG sector, with larger players and private equity firms acquiring promising brands.
