Norway’s packaged consumer goods firm Orkla said it will purchase a 67.8% stake in Kerala-based spice maker Eastern Condiments Pvt. Ltd and merge it with its existing MTR Foods business to create a larger enterprise comprising ready-to-eat mixes and spices.
Orkla, which forayed into the Indian market through the 2007 takeover of MTR, said the deal will double its sales from India.
“With the transaction announced today, Orkla will grow its position as one of the leading branded food players in India and have a platform for further growth in the spice category and in adjacent categories,” Orkla said in a release.
As part of the deal, Orkla will buy the stake via its wholly-owned unit MTR Foods Pvt. Ltd. MTR will pick a 41.8% stake from the Meeran family—promoters of the Eastern brand, as well as the entire 26% stake of McCormick Ingredients in Eastern Condiments. The rest 32.2% stake will be held by brothers Firoz and Navas Meeran, the promoters of Eastern. Subsequently, Eastern will be merged with MTR, where the Meeran brothers will have a 9.99% stake.
The initial deal is expected to close in the December quarter, while the merger process is expected to be completed by the first quarter of 2022.
The deal is subject to the approval of the Competition Commission of India.
Avendus Capital advised the Meeran family and McCormick on the deal. Eastern is valued at ₹20 billion on a cash and debt-free basis, Avendus said.
“By joining forces, Eastern and MTR will create a solid platform in the fast-growing Indian market, based on strong local brands,” said Jaan Ivar Semlitsch, Orkla President and CEO.
India’s spice market is dominated by regional players as taste profiles and flavours vary across regions. This allows local spice makers to hold sway over consumers. But, over the years, as consumers switch from unbranded or loose foods to branded, packaged ones, spice makers are in huge demand. That’s also because Indians still continue to cook meals at home, and spices and spice mixes are a large part of in-home consumption.
Eastern was established in 1983 by M. E. Meeran. Close to half of its business is generated in Kerala; it also has a significant presence in the export market, especially in West Asia. Eastern sells a range of non-vegetarian and vegetarian blended and single spices, rice powders, pickles, etc.
