Authum Investment & Infrastructure and Mahi Madhusudan Kela are set to acquire a 46.85% stake in Prataap Snacks, known for its popular snack brands Yellow Diamond and Rich Feast, through a Rs 846.60 crore deal with existing private equity promoters. The acquisition will trigger an open offer to purchase an additional 26% stake from public shareholders at Rs 864 per share, totaling Rs 544.17 crore. Prataap Snacks, one of India’s fastest-growing snack companies with robust distribution across the country, will remain listed on the stock exchange post-transaction, maintaining its market presence and growth trajectory.

Strategic Acquisition of Prataap Snacks

Authum Investment and Mahi Madhusudan Kela's Major Stake Purchase Authum Investment & Infrastructure and Mahi Madhusudan Kela have entered into a strategic share purchase agreement to acquire a 46.85% stake in Prataap Snacks, valued at Rs 846.60 crore. The acquisition involves purchasing stakes from three private equity promoters: Peak XV Partners Growth Investments I, Peak XV Partners Growth Investment Holdings II, and Sequoia Capital GFIV Mauritius Investments, which hold 2.48%, 34.65%, and 9.72% stakes, respectively. The transaction marks a significant shift in ownership, positioning Authum and Kela as controlling stakeholders.

Transaction Details and Valuation

Terms of the Share Purchase Agreement According to the share purchase agreement dated September 26, 2024, the acquirers will purchase approximately 1.02 crore equity shares of Prataap Snacks at Rs 746 per share, culminating in a total deal size of Rs 846.60 crore. This acquisition reflects the acquirers' strategic interest in expanding their portfolio into the high-growth snack food sector, leveraging Prataap Snacks’ established market presence and extensive distribution network.

Open Offer Triggered by Control Acquisition

Offer to Acquire Additional Stake from Public Shareholders Following the acquisition of a controlling stake, the acquirers have announced an open offer to acquire an additional 26% stake in Prataap Snacks from the market. The offer price is set at Rs 864 per share, aggregating to a total consideration of Rs 544.17 crore. Notably, the offer price represents an 18.31% discount compared to Prataap Snacks' recent trading price of Rs 1,057.70, which may influence shareholder participation in the open offer.

Market Performance and Future Listing Plans

Retention of Listing Status Post-Transaction Despite the change in ownership, Prataap Snacks will remain a publicly listed entity, as the acquirers do not intend to delist the stock. The company's shares have seen significant volatility, with a 52-week high of Rs 1,371.45 reached on January 18, 2024. The open offer and subsequent market reactions will be closely monitored as the acquisition progresses, impacting shareholder sentiment and stock performance.

Company Profile and Growth Trajectory

Expanding Presence in India’s Snack Food Market Founded in 2003 in Indore, Madhya Pradesh, Prataap Snacks has emerged as one of India’s fastest-growing snack companies. It operates 15 manufacturing facilities, including 8 owned and 7 contracted, and collaborates with over 5,200 distributors, reaching 2.5 million retail touchpoints nationwide. In FY 2024, Prataap Snacks reported revenue of Rs 1,617.93 crore, achieving a compound annual growth rate (CAGR) of 14% over the past decade, underscoring its strong market position.

What to Expect Next

1. Potential Strategic Realignment and Expansion Plans
With new stakeholders at the helm, Prataap Snacks could undergo strategic realignments, including product diversification or geographic expansion. Authum and Kela may leverage the brand’s established infrastructure to explore new market segments and enhance operational efficiencies.

2. Market Response to Open Offer and Share Price Movements
The open offer at a discounted rate may impact short-term trading behavior, as investors weigh the offer against market valuations. Stock performance will be a critical indicator of market confidence in the company’s future under new leadership.

3. Continued Focus on Scaling Operations and Distribution Networks
Prataap Snacks’ extensive distribution network and manufacturing capacity will likely remain focal points for scaling operations. Future investments might target technology upgrades, supply chain optimization, and expanding the company’s footprint in emerging markets, bolstering its competitive edge in the snack industry.

These strategic moves underscore the ongoing evolution of Prataap Snacks, positioning it for sustained growth in a competitive market landscape.