“Tata Consumer Set to Acquire Capital Foods for Rs 5,100 Crore in All-Cash Deal, Expanding FMCG Portfolio with Ching’s Secret and Smith & Jones Brands”
In a significant move within the Fast-Moving Consumer Goods (FMCG) sector, Tata Consumer Products announced on January 12 that it will acquire the entire issued equity share capital of Capital Foods, the company behind popular brands such as Ching’s Secret and Smith & Jones. The acquisition, valued at Rs 5,100 crore, will be an all-cash deal, marking a substantial strategic expansion for Tata Consumer.
In a significant move within the Fast-Moving Consumer Goods (FMCG) sector, Tata Consumer Products announced on January 12 that it will acquire the entire issued equity share capital of Capital Foods, the company behind popular brands such as Ching’s Secret and Smith & Jones. The acquisition, valued at Rs 5,100 crore, will be an all-cash deal, marking a substantial strategic expansion for Tata Consumer.
According to an exchange filing by Tata Consumer Products, the Board of Directors approved the acquisition, and the company has entered into a Share Purchase Agreement (SPA) and Shareholders’ Agreement (SHA) with the existing promoters and shareholders of Capital Foods. The acquisition will take place in a phased manner, with 75 percent of the equity shareholding acquired upfront and the remaining 25 percent to be acquired within the next three years.
Capital Foods, with an estimated turnover of approximately Rs 750 to Rs 770 crore for FY24, has been a notable player in the FMCG industry. Ching’s Secret, a market leader in Desi Chinese products, encompasses a range of categories, including chutneys, blended masalas, sauces, and soups. Smith & Jones, another brand under Capital Foods, has experienced fast growth and caters to in-home cooking of Italian and other western cuisines.
Tata Consumer expressed its excitement about the acquisition, stating that it will expand its product portfolio and strengthen its pantry platform. The deal is anticipated to open up significant market opportunities, particularly in the fast-growing non-Indian cuisines segment.
Sunil D’Souza, MD & CEO of Tata Consumer Products, commented on the strategic and financial fit of the acquisition. “We believe this is a good strategic and financial fit. It will open up significant market opportunities in the fast-growing non-Indian cuisines segment, leveraging the sales and distribution platform that we have built,” he said. D’Souza also highlighted the strong brand recall of Ching’s Secret and Smith & Jones, expressing confidence in driving topline growth and realizing cost synergies.
As of the last closing price, Tata Consumer is valued at 12 times its FY23 sales and 11.5 times its FY24 (annualized) sales. The estimated valuation of Capital Foods, based on FY24 sales, is approximately 7 times, making this acquisition a notable financial move for Tata Consumer.
The founder of Capital Foods, Ajay Gupta, holds 9.45 percent in the company, while the majority of the stake is held by private equity funds General Atlantic and Artal Asia. The deal signals a strategic alignment between Tata Consumer and Capital Foods, poised to shape the landscape of the FMCG sector and tap into the growing demand for diverse culinary offerings.
As the acquisition progresses, industry observers will be closely monitoring how Tata Consumer integrates Capital Foods into its operations and leverages the strengths of both entities to drive growth and innovation in the competitive FMCG market.
Sources By Agencies
About The Author
