Sep 6, 2018
The Coca-Cola Co. and the Zydus Cadila Group have come out as the two strongest competitors for the consumer portfolio of Kraft Heinz in India, which includes the children’s milk drink Complan. Amid final negotiations the two are expected to submit binding bids.
Kraft Heinz had narrowed the list of bidders for a second round of talks and shortlisted some of the biggest food and consumer companies including Tata Group, Wipro Consumer, Dabur India and Danone along with Coca-Cola and Zydus Cadila.
Nestle, Emami and ITC were the other contenders that had explored the opportunity but were either not shortlisted or didn’t want to participate after initial evaluations.
Kraft Heinz has been seeking about $1 billion for the assets and had mandated investment bank JP Morgan earlier this year to manage a formal sale process.
Bids are mostly expected to be in the $550-600 million range.
If a deal is struck, it will be the first big acquisition by Coca-Cola in a key market after it bought Parle’s beverage brands, including Thums Up, in the early 1990s. Entry into products such as glucose, its key target, and milk-based drinks would give Coca-Cola bandwidth in new distributor channels as well, the person said.
For Ahmedabad-based Zydus Wellness, the listed consumer business subsidiary of Pankaj Patel-led Zydus Cadila Healthcare, the Kraft Heinz portfolio will add to its existing offerings of personal and skin care, sugar substitutes and health foods. The business, accounting for 4 per cent of the Zydus Cadila Group’s total revenue, grew 7 per cent in FY18 from the year earlier. The three mainstay brands — Sugar Free, Everyuth, and Nutralite — registered faster growth despite challenges such as the rollout of the goods and services tax (GST).