Hershey to buy 51% stake in Godrej Beverages & Foods

Hershey, America’s largest chocolate and confectionery-maker, is acquiring majority stake in the food and beverage business of the Godrej Group. Hershey is acquiring 51% equity stake in Godrej Beverages & Foods for Rs. 238 crores or about $54 mn. Hershey would also license Godrej Beverages & Foods some of its trademark rights for a lump sum payment of about $2 mn in addition to royalty payments of 5% for domestic sales and 8% for exports.

With this investment, financial investor IL&FS will exit from the venture while the holdings of the Godrej Group and that of an individual investor A Mahendran would come down. Post-acquisition, Hershey would hold 51% equity while Godrej Industries would hold 43% stake with the remaining 6% to be held by A Mahendran, a senior executive with the Godrej Group. The deal values the equity stake of Godrej Industries, a listed arm of the Godrej Group, at Rs. 200 crores. The deal values Godrej Beverages & Foods at Rs. 466 crores. Hershey would pick up the majority stake through multiple transactions. This would include acquiring the 40% equity held by IL&FS, acquisition of the convertible preference shares held by IL&FS, Godrej Industries and Mr. Mahendran as also subscription to fresh issue of capital in the company.

Godrej Beverages & Food represents the foods and beverages business of the Mumbai-based Godrej Group. It was formed last year when Godrej Industries transferred its foods division to another group company Godrej Tea. The combined entity was renamed as Godrej Beverages & Food Limited. With a turnover of around Rs. 400 crores, the company is engaged in categories such as tea, edible oils, health drinks including soymilk, tomato puree, fruit drinks and bakery fats.

Read The Economic Times article.

Avesthagen sells 20% stake for €25 mn

Bangalore-based integrated life sciences company Avestha Gengraine Technologies Limited (Avesthagen) has closed Series C of private equity fundraising of around €25 mn by divesting 20% equity to external investors. The investment values the company at € 115 mn (Rs. 667 crores). The investors in the company are Fidelity International (10%), the Limagrain Group of France (5%), Daninvest of the Danone Group (4.57%), and Bennett, Coleman & Company Limited (2.4%). The total foreign investment in the company is now over 31%. The existing investors of Avesthagen include ICICI Ventures, Cipla, Godrej Industries, Tata Industries and bioMerieux. The company has also commenced preparations for its initial public offering scheduled to hit the market by mid-2008.

The company commenced its operations as an agri-biotech company in 2001 and then moved on to become a healthcare technology company, pursing its vision of convergence of food, pharmaceuticals, and population genetics, leading to preventive personalized medicine. The other activity of the company has been agri-biotech product development of scientifically validated bioactive nutraceuticals, derived from Indian medicinal plants, as well as the development of bio-similar drugs. The company has four strategic business units: bio-pharmaceuticals, food for medicine (bio-nutritionals), seed for food (agri-biotech) and science and innovation. The company registered Rs. 1.1 crore in profit and Rs. 18 crore revenue in 2005-06.

The funds will be used for Avesthagen’s infrastructure expansion plans, including setting up of manufacturing units and research and development laboratories, and acquisition of technology companies to scale up production and marketing.

Read the article in Business Standard.

Norwegian company to buy MTR Foods for Rs. 350 crores

Norwegian food company Orkla Foods may turn out to be the acquirer of South-based MTR Foods. The deal size is said to be around Rs. 325-350 crores. Earlier, US spice company McCormick was widely tipped to take over MTR. However, the deal fell through at the last minute due to differences over structuring of the deal, particularly on certain intellectual property issues relating to the brand name.

Orkla is keen on acquiring MTR as it will provide a launch pad for Indian operations. The Norway-based company has presence in bakery, seafood, pizzas, pies, taste enhancers and snacks. In the past, Orkla has grown its international presence through acquisitions in Romania, Sweden, Denmark and Iceland. Orkla Foods is part of Orkla ASA, one of Norway’s largest listed companies with its core businesses being branded consumer foods, specialty materials and financial investments.

MTR’s brand pull is such that several large Indian corporates, including Tata Coffee, ITC, Godrej and several PE funds like Blackstone, Indivision and Actis had shown interest in the company. NM Rothschild was the investment banker for MTR, and had estimated a value of Rs. 300 crores on the company when it called for bids earlier this year. The Maiya family controls 59% stake in the company directly and indirectly, with JP Morgan holding 26% stake. Another fund, Aquarius, holds 14-15%. MTR’s portfolio comprises ready-to-eat, ready-to-cook food ingredients and spices.

Read The Economic Times article for more details.