Patanjali Foods Ltd. said on Monday that its board has approved the proposal to acquire the home and personal care business of Patanjali Ayurved Ltd., in a deal that values the segment at Rs 1,100 crore as it aims to strengthen its position in the fast-moving consumer goods sector.
The transaction, which will be completed on a slump sale basis, will occur in five tranches, the company said in a statement to the exchanges.
The first tranche of Rs 220 crore will be paid within 10 business days of receiving Competition Commission of India and shareholder approvals, as well as lender approval from the State Bank of India. Subsequent payments will follow, with the final tranche of Rs 55 crore due upon conveyance of all properties related to the business undertaking.
"This strategic initiative for acquisition of home and personal care business shall strengthen the company's existing FMCG product portfolio, with an array of marquee brands that will contribute to significant growth in revenue and Ebitda," Patanjali Foods said. The non-food business presently caters to dental care, skin care, home care and hair care.
Separately, a 20-year licensing arrangement for a 3% turnover-based fee along with other conditions has been agreed upon between the companies.
"The acquisition will lead to a consolidation of 'Patanjali' brand FMCG products portfolio," said Patanjali Foods. It will bring along with it multiple key synergies in terms of brand equity and enhancements, product innovations, cost optimisation, infrastructure and operational efficiencies and positive impact on market share, according to the company.
As of March 31, 2024, the Ramdev-led Patanjali Ayurved owned 32.4% stake in Patanjali Foods.
The non-food business is operated from the manufacturing plant located at Patanjali Foods and Herbal Park in Haridwar, Uttarakhand. The turnover of PAL for the year-ended March 31, 2024, was approximately Rs 6,199 crore.
This acquisition qualifies as a related-party transaction since PAL is one of the promoters of Patanjali Foods. Key individuals involved include Ram Bharat, managing director of Patanjali Foods and director of Patanjali Ayurved; and Acharya Balkrishna, chairman of Patanjali Foods and managing director of Patanjali Ayurved—holding 98.54% of PAL's equity.
The deal is conducted on a fair value and arm's length basis. No shares are being acquired under this agreement—instead, it solely focuses on licensing rights and related payments.
Shares of Patanjali Foods ended at Rs 1,699.65 apiece, up by 6.81%, on the BSE on Monday as against a 0.56% gain in the benchmark Sensex.
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