Norway co to buy MTR for Rs 350-cr
By Chaitali Chakravarty & Javed Sayed, TNN |
Highlights
NEW DELHI: Orkla Foods of Norway is close to acquiring South-based MTR Foods for Rs 325-350 crore. While US spice company McCormick was widely tipped to take over MTR, the deal fell through at the last minute due to differences over structuring of the deal, particularly on certain intellectual property issues relating to the brand name.
Highly-placed sources say that the Orkla-MTR deal should be closed in the next few weeks, but given the various twists and turns of the MTR sell-off saga, this is one deal that won���t be over until the dotted line is signed. A source added that Indian companies, which had lost interest in the initial phase, may join the fray again.
When contacted, a senior MTR official declined to comment. Repeated calls to MTR MD Sadanand Maiya did not elicit any comment. Orkla is keen on acquiring MTR as it will provide a launch pad for Indian.
The Norway-based company has presence in bakery, seafood, pizzas, pies, taste enhancers and snacks. In the past, Orkla has grown its international presence through acquisitions in Romania, Sweden, Denmark and Iceland.
Orkla Foods is part of Orkla ASA, one of Norway���s largest listed companies with its core businesses being branded consumer foods, specialty materials and financial investments. An industry source said that a foreign company like Orkla would pay the kind of money MTR is looking for, largely due to three reasons.
Firstly, besides getting a grip on the Indian market, it can use the brand and products to cater to the overseas market, where there���s a huge demand for Indian food. Secondly, MTR Foods already exports to the US, the UK and Australia. Thirdly, if Orkla wants, it can outsource manufacturing to India, bringing substantial cost savings.
MTR���s brand pull is such that several large Indian corporates, including Tata Coffee, ITC, Godrej and several PE funds like Blackstone, Indivision and
Actis had shown interest in the company.
Some of them had even held detailed talks with the promoters of MTR on the issue. Steep valuations, however, kept most of them off the negotiating table.
The only company that was willing to pay a high price for MTR was the US-based spice and seasoning company McCormick, which was planning an India entry. However, the deal fell through after hectic parleys.
NM Rothschild, the investment bankers for MTR, had estimated a value of Rs 300 crore on the company when it called for bids earlier this year. The Maiya family controls 59% stake in the company directly and indirectly, with JP Morgan holding 26% stake. Another fund, Aquarius, holds 14-15%. MTR���s portfolio comprises ready-to-eat, ready-to-cook food ingredients and spices.
Highly-placed sources say that the Orkla-MTR deal should be closed in the next few weeks, but given the various twists and turns of the MTR sell-off saga, this is one deal that won���t be over until the dotted line is signed. A source added that Indian companies, which had lost interest in the initial phase, may join the fray again.
When contacted, a senior MTR official declined to comment. Repeated calls to MTR MD Sadanand Maiya did not elicit any comment. Orkla is keen on acquiring MTR as it will provide a launch pad for Indian.
The Norway-based company has presence in bakery, seafood, pizzas, pies, taste enhancers and snacks. In the past, Orkla has grown its international presence through acquisitions in Romania, Sweden, Denmark and Iceland.
Orkla Foods is part of Orkla ASA, one of Norway���s largest listed companies with its core businesses being branded consumer foods, specialty materials and financial investments. An industry source said that a foreign company like Orkla would pay the kind of money MTR is looking for, largely due to three reasons.
Firstly, besides getting a grip on the Indian market, it can use the brand and products to cater to the overseas market, where there���s a huge demand for Indian food. Secondly, MTR Foods already exports to the US, the UK and Australia. Thirdly, if Orkla wants, it can outsource manufacturing to India, bringing substantial cost savings.
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MTR���s brand pull is such that several large Indian corporates, including Tata Coffee, ITC, Godrej and several PE funds like Blackstone, Indivision and
Actis had shown interest in the company.
Some of them had even held detailed talks with the promoters of MTR on the issue. Steep valuations, however, kept most of them off the negotiating table.
The only company that was willing to pay a high price for MTR was the US-based spice and seasoning company McCormick, which was planning an India entry. However, the deal fell through after hectic parleys.
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Experts said MTR ran into rough weather when one of its foreign investors asked for topline growth at a rapid speed. Even as the company did so, it did not have the required distribution network to support sales at such a rapid speed. As a result, there was an inventory pile up. ���Since then, the company has put itself in order and should end the year with an estimated turnover of Rs 160-165 crore and a profit of over Rs 10 crore,��� said a PE source.NM Rothschild, the investment bankers for MTR, had estimated a value of Rs 300 crore on the company when it called for bids earlier this year. The Maiya family controls 59% stake in the company directly and indirectly, with JP Morgan holding 26% stake. Another fund, Aquarius, holds 14-15%. MTR���s portfolio comprises ready-to-eat, ready-to-cook food ingredients and spices.
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