India's Haldiram's seeks to buy rival Prataap Snacks, sources say (updated)

Prataap Snacks

18/01/2024 10:46

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      India's Haldiram's considers majority stake in Prataap-
sources
    

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      Early talks now, valuation not decided yet- sources
    

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      Prataap's shares still trade around 2017 listing price
    

  
 (Updates shares in paragraph 2)
    By M. Sriram
       MUMBAI, Jan 18 (Reuters) - Indian snacks maker
Haldiram's is in talks to acquire a majority stake in listed
rival Prataap Snacks  PRAT.NS , which is valued at $350 million,
to expand its presence in the potato chip market, two people
with direct knowledge of the matter said.
    Prataap Snacks shares in Mumbai jumped about 13% to their
highest levels since 2018 after the news, before paring some
gains to close 9.7% higher.
    The talks are at an early stage and a valuation has not been
discussed, though it could be at a premium to Prataap's stock
price. Haldiram's is considering a majority stake of at least
51%, but a final number has not been decided, said the sources,
who declined to be named as the discussions are confidential.
    Prataap is best known for its Yellow Diamond brand of chips
and competes with Pepsi's  PEP.O  Lay's brand and other
snack-makers in a market where local, unorganised food sellers
still dominate the fried chips segment.
    Venture capital firm Peak XV Partners, formerly known as
Sequoia Capital India, owns around 47% of Prataap Snacks and is
looking to fully exit its stake in Prataap, the sources added.
    Haldiram's CEO Krishan Kumar Chutani, Prataap CEO Amit
Kumat, and Peak XV all declined to comment.
    Prataap made its stock market debut in 2017 and had annual
revenues of around $200 million last year. It says it sells over
12 million packets of its salty snacks daily, which are priced
as low as 5 rupees (6 U.S. cents).
    However, unlisted Haldiram's, a family-run business founded
in 1937, is a much larger manufacturer of packaged snacks with
revenue of over $1 billion and runs 150 restaurants across the
country. Last year, Reuters reported the company was seeking a
$10 billion valuation in deal talks with conglomerate Tata Group
and other strategic investors it wanted to bring on board, but
the talks didn't materialize over valuation concerns.
    "A deal (with Prataap) will help Haldiram's tap the potato
chips segment. Consumers often prefer western flavoured snacks
over local ones," said one of the sources.
    Prataap has 14 manufacturing plants across nine Indian
states. Though smaller unorganized companies dominate India's
fried snacks landscape, branded products have boomed in recent
years as consumers become health conscious and have higher
disposable incomes to spend on packaged goods. 
    India's Moneycontrol news website reported on Dec. 19 that
Prataap's founders and Peak XV were looking to sell a stake to
investors and conglomerates, but did not name buyers.
    Local snack makers like Prataap have struggled with
inflationary pressures and rising competition in India, a price
-conscious market, and its stock price is still hovering near
its 2017 listing level. 
    Prataap in a November earnings report estimated India's
snacks market was worth $5.2 billion, growing 14% each year. 

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India's Prataap Snacks surges on reports of Haldiram's eyeing
majority stake    https://tmsnrt.rs/48yb6Ds
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 (Reporting by M. Sriram; Editing by Aditya Kalra, Christian
Schmollinger and Emelia Sithole-Matarise)
 ((Sriram.Mani@thomsonreuters.com;; Reuters Messaging: Twitter:
@followthemani))