Japanese vegetable-based food products maker Kagome Co Ltd has acquired 70 per cent stake in the promoter entity of ready-to-eat Indian ethnic and Asian food products maker Tasty Bite Eatables Ltd (TBEL) for an undisclosed amount, according to a stock market disclosure.
The Japanese firm has bought the stake in US-based holding company Preferred Brands International Inc (PBI) whose arm in turn owns 74.22 per cent of public listed TBEL. Post this, TBEL has become an subsidiary of Kagome with an indirect holding of 51.95 per cent stake.
Although the deal value has not been disclosed, based on the imputed value of transaction from the open offer price, it is estimated to be around Rs 87.4 crore ($14 million).
US-based consulting and venture advisory firm ASG-Omni, which had got control of TBEL over 15 years ago, will continue to own the remaining 30 per cent stake in PBI and would continue as a co-promoter. ASG-Omni is led by former Pepsi and Unilever executives (Ashok Vasudevan, Sohel Shikari and others) some of whom were involved in marketing of Tasty Bite products in the US.
TBEL was initially targeted at selling food products in India in the mid-80s but after a failed attempt it focused on the overseas markets, especially the US-based Indian diaspora. Over the last one decade it launched its products in India again.
Vasudevan, CEO of PBI and chairman of TBEL, will continue as chairman of TBEL and Masahiro Sean Sumitomo, managing executive officer of Kagome, will join the board of TBEL in India and serve as co-chairman of parent firm PBI.
"This transaction allows us to leverage our respective strengths including immediate access to each other’s retail and food service channels, R&D centres, manufacturing capabilities and management teams,” said Hidenori Nishi, chairman, Kagome.
"As part of our strategic push to grow our international business, we will work closely with PBI's management to create a fully integrated farm-to-fork natural food & beverage company that will participate in key global markets," said Masahiro.
Founded in 1899, Kagome, which has revenues of around $2 billion, manufactures condiments, tomato products and vegetable juices. The company has a footprint in 50 countries.
Its products are sold in the US, Canada and Australia besides India.
For the quarter ended December 31, 2014, TBEL's net revenue was Rs 40.45 crore against Rs 38.77 crore in the year-ago period. Its net profit more than doubled to Rs 2.3 crore from Rs 1 crore in the same period.
Open offer
Given the indirect acquisition of TBEL, Kagome has made an open offer to public shareholders to acquire remaining 25.78 per cent stake in the company.
The company has sought to buy up to 6.6 lakh shares at Rs 655.57 each, aggregating Rs 43.4 crore ($6.9 million).
ICICI Securities Ltd is managing the offer on behalf of Kagome.
Shares of TBEL hit the upper circuit breaker after rising almost 20 per cent to Rs 770 each on BSE in a flat Mumbai market on Wednesday.
(Edited by Joby Puthuparampil Johnson)