A consortium led by Blackstone, the world’s largest private equity fund, in collaboration with Abu Dhabi Investment Authority (ADIA) and GIC of Singapore, reportedly submitted a non-binding bid late last week to acquire a controlling stake in Haldiram Snacks Food Pvt Ltd (HSFPL), as per sources cited by ET. HSFPL represents the combined packaged snacks and foods business of the Delhi and Nagpur factions of the Agarwal family.
Haldiram, a company with an 87-year legacy, stands as India’s leading provider of snacks and convenience foods.
Blackstone and its partners are keen to acquire a 74-76% stake in the company, estimating the business’s value to be between $8-8.5 billion (INR 66,400-70,500 crore). ADIA and GIC serve as limited partners or sponsors of Blackstone’s global funds. Should the deal materialize, it would mark the most significant private equity buyout in India to date.
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Blackstone and ADIA refrained from commenting. GIC did not respond to the email.
Haldiram CEO KK Chutani stated, “The company has no comments to provide.”
In May last year, Chutani, former chief executive of Dabur International, was appointed as the CEO of Haldiram’s, marking the first time a professional has taken the helm of the company.
The completion of any transaction hinges on the ongoing merger between the Nagpur and Delhi factions, as per a plan sanctioned by the National Company Law Tribunal (NCLT). This merger is anticipated to conclude within the next three to four months. Approval for the merger was granted by the Competition Commission of India (CCI) last April. Additionally, Blackstone has reached out to its Canadian and other Asian limited partners (LPs), who may participate if discussions advance or the overall deal size increases, according to the aforementioned sources.
However, they emphasized that the non-binding bid does not ensure the formation of a deal.
Bain Capital, which has engaged in extensive discussions with Haldiram’s on multiple occasions in the past, is also in contention, as first reported by Mint on May 7.
As part of the restructuring, the two factions of the Haldiram family divided their FMCG or packaged foods business and their restaurants business into separate entities. Following this, Haldiram Foods International Pvt Ltd (HFIPL) led by the Nagpur faction and Haldiram Snacks Pvt Ltd (HSPL) led by the Delhi family were merged to form a new entity—Haldiram Snacks Food Pvt Ltd (HSFPL). Post-merger, the Delhi faction, led by Manohar Agarwal and Madhu Sudan Agarwal, will possess a 55% stake in Haldiram Snacks Food Pvt Ltd, while the Nagpur faction, led by Kamalkumar Shivkisan Agrawal, will own the remainder.
The third faction of the Haldiram empire, located in the eastern region, is not participating in the merger proceedings.
The snack food enterprise is involved in producing and distributing over 500 varieties of products, including snacks, namkeen, sweets, ready-to-eat and pre-mixed foods, cookies, non-carbonated ready-to-drink beverages, and pasta. Its operations span across 100 countries, with many operating through franchisees, encompassing regions such as the UK, US, and Japan.
The company has further expanded its portfolio with various sub-brands like Minute Khana, Cup Shup, and Cookie Heaven. In January, it ventured into chocolates with the Cocobay brand. Additionally, it is extending its reach into retail supermarkets and quick-commerce platforms to compete with established players like Britannia in cookies and Mondelez and Amul in chocolates. Furthermore, the company has acquired other smaller brands such as Babaji Namkeen, Akash Namkeen, and Atop Foods.
The restaurant business, valued at INR 1,800 crore, is excluded from the transaction.
As per individuals knowledgeable about Haldiram operations, the combined snacks business is anticipated to achieve a FY24 revenue of INR 14,500 crore, with an EBITDA ranging between INR 2,300-2,500 crore. Over the past five years, the business has maintained a compound annual growth rate of 18% in revenue. The average EBITDA margin stands at 14-15%, although it rose to 17-18% last year due to favorable commodity rates and price adjustments in FY23.
The Agarwal family has been in talks with a number of private equity companies between 2016 and 2017 regarding either a minority or majority investment, including General Atlantic, Bain Capital, Capital International, TA Associates, Warburg Pincus, and Everstone.
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In 2018-19, spanning over a year, the family engaged in negotiations with Kellogg’s, then the world’s second-largest snack foods maker, to sell a controlling 51% stake at a $3 billion valuation, excluding the restaurant business. However, alterations to the deal terms resulted in the US company ultimately walking away in frustration.
Before that, PepsiCo’s Indra Nooyi had pursued a buyout with the Agarwals. In September of last year, Reuters reported that Tata Consumer Products Ltd was in discussions with the Agarwal family to purchase a 51% stake but hesitated due to the $10 billion price tag. Both companies formally refuted the reports.
A snack food industry veteran remarked, “With the merger nearing completion and a professional CEO in place, the likelihood of a transaction is now more tangible than ever. The next generation lacks the same fervor and dedication to pursue the business, which serves as another catalyst. However, the family is adamant about securing a premium valuation. Ultimately, unlocking value through listing the business is also a viable option, as the public market tends to value operations more than private equity.”
Haldiram’s originated from a sweets and namkeen shop established by bhujia maker Ganga Bishan Aggarwal in 1937 in Bikaner, Rajasthan. Later on, Agarwal divided the business among his sons into three distinct divisions.
Although Haldiram holds a significant share in the snacks market, there are other competitors such as PepsiCo’s brands (Lays, Kurkure), Balaji Snacks, Prataap Snacks (Yellow Diamond), Bikanervala, Bikaji Foods (recently listed), and ITC Foods, known for its chips sold under the Bingo franchise.
A Frost & Sullivan report suggests that the Indian savory snacks market was valued at INR 72,800 crore in 2021 and is projected to reach INR 1,19,000 crore by 2025, growing at a CAGR of 13%. This market can be broadly categorized into western snacks and traditional snacks, with the latter contributing approximately 48% to the total savory snacks market. Traditional snacks include namkeens, bhujia, and ethnic snacks like dry samosa, kachori, chakli, etc. Despite 43.4% of the packaged savory snacks market being unorganized, organized players such as Haldiram, Pepsico (Lays), Balaji, and Bikaji maintain a strong presence nationwide and command significant market share in regional areas. The organized savory snacks market is estimated to be INR 41,000 crore in 2021. Currently, the ethnic namkeen and snacks market is valued at INR 10,800 crore, experiencing substantial growth in recent years, particularly since the onset of the pandemic.
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