FDBusiness.com

Orkla, the Nordic region’s largest branded consumer goods company, has entered into an agreement to acquire a 67.8% stake in Eastern Condiments. The deal will double Orkla’s sales in India.

Orkla already holds a strong position in the Indian branded food market with the well-known MTR brand which has grown its sales five-fold since it was acquired by Orkla in 2007. With the latest transaction, 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.

Following completion of the acquisition, a merger application will be filed with the intention of merging Eastern into Orkla’s wholly owned subsidiary MTR. The merger will result in the union of two iconic Indian brands. The merged business will create a solid base for future growth in the Indian branded food market, driven by the positions of Eastern and MTR in spices and packaged food categories. With this transaction Orkla will establish a platform for further growth in India in several categories.

The parties have agreed on a purchase price that values Eastern (100%) at INR20 billion (NOK 2.4 billion, €227 million) on a debt and cash free basis.

“This announcement marks a significant step for Orkla towards delivering on its strategy to strengthen our footprint in our core geographies. By joining forces, Eastern and MTR will create a solid platform in the fast-growing Indian market, based on strong local brands. MTR has been a great success story for Orkla,” says Orkla President & CEO Jaan Ivar Semlitsch.

“Eastern and MTR have a strong combined portfolio of complementary products, an attractive geographical presence and good export potential. The Indian branded food and spice markets are growing by double digits, and we see positive long-term demand dynamics with increasing purchasing power and more urban lifestyles. We are looking forward to this new partnership. This will definitely strengthen Orkla’s position in India,” says Sanjay Sharma, CEO of MTR.

Eastern has seven production facilities in four different states in India and employs around 2,955 people. Its headquarters are located in Edapally, Kochi.

The agreement to acquire a majority stake in Eastern is subject to the approval of the Competition Commission of India. The subsequent merger process is expected to take approximately 15 months after completion of the acquisition.