Nestle SA, a multinational food and beverage company headquartered in Switzerland, is reportedly among the bidders for the acquisition of Capital Foods Pvt Ltd. As per insider information, Nestle is competing against Tata Consumer Products and The Kraft Heinz Co for the purchase of the Indian company known for producing condiments, food items, and ingredients under the Ching’s Secret and Smith & Jones brands.
Among the list of potential candidates being considered, ITC has been identified by the sellers and their advisors as another contender in the running.
Late last year, the three major shareholders of Capital Foods Pvt Ltd made the decision to sell the company. These shareholders are Invus Group, a European family office and investment arm with a 40% stake; US private equity firm General Atlantic, which holds a 35% stake; and Ajay Gupta, Founder Chairman of Capital Foods and a former Advertising Executive who turned his focus to the food industry, with a 25% stake. The intention to sell was initially reported by ET on November 14, 2022.
Under a sale mandate managed by Goldman Sachs, Capital Foods Pvt Ltd has been valued between $500 million to $800 million. The company has approached nearly a dozen global and local consumer food corporations, including Hindustan Unilever, Norway’s Orkla, Nissin Foods, and General Mills, among others, to consider purchasing the business. Following the submission of non-binding bids, the three leading contenders for the acquisition have been identified as Invus Group, US private equity firm General Atlantic, and ITC.
According to one of the sources mentioned earlier, Nestle is said to be working on an all-cash offer, while Kraft has expressed interest in acquiring up to 75% of Capital Foods Pvt Ltd and then taking the company public. General Atlantic is reportedly looking to exit completely, while Invus Group and Ajay Gupta are open to staying on board for potential future value upside, depending on the offers made.
“Capital Foods’ brands Ching’s and Smith & Jones are fast growing across India. We get approached by investors to invest in the business and participate in this exciting growth story. However, we would not like to respond to market speculation, gossip and rumours,” said Gupta.
Efforts to obtain comments from representatives of General Atlantic and Invus Group were unsuccessful.
In a recent interview at the end of last month, Nestle India Chairman Suresh Narayanan mentioned that the company regularly evaluates acquisition opportunities as part of its ongoing evaluation process.
In an email response, a spokesperson for ITC stated that the company does not provide comments on market speculations.
A spokesperson for Nestle said, “We would not like to comment.”
As of press time, email inquiries sent to Tata Consumer and Kraft did not receive any response.
According to insiders close to the company, Capital Foods Pvt Ltd is projected to end FY23 with a top-line of INR 900 crore and an EBITDA margin of 25%. The core business is growing at a compound annual growth rate (CAGR) of 30%, while other similar brands are expanding at single-digit rates.
In February, S Raghunandan was appointed as the Chief Executive Officer of Capital Foods. He is a seasoned veteran in the consumer industry and is known for his proficiency in restructuring operations before selling them or buying out foreign partners. Raghunandan has previously worked at HUL, Dabur India, Paras Pharmaceuticals, Reckitt Benckiser India, and Jyothy Laboratories. He was responsible for selling Paras Pharmaceuticals to Reckitt and leading Jyothy’s acquisition of the unprofitable India business of the German company, Henkel in India.