Sources familiar with the matter have revealed that ITC is currently assessing the potential acquisition of a 47% stake owned by Peak XV Partners (formerly Sequoia Capital) in the publicly listed Prataap Snacks. This development comes after unsuccessful negotiations with Haldiram’s due to a disparity in valuation. Prataap Snacks, renowned for its Yellow Diamond chips and traditional Indian namkeen under the Avadh brand, has also attracted interest from Bikaji Foods, another prominent snack company, although discussions fell through, as per insiders.
Private equity giants such as KKR, TA Associates, and Apax have been approached after Peak XV initiated efforts to completely divest its nearly 13-year-old investment in Prataap, enlisting Deutsche Bank to oversee the sale process.
Should the transaction materialize, it would necessitate an open offer for an additional 26% of the Indore-based company, which has struggled since its stock market debut in 2017. Prataap’s stock closed marginally lower at Rs. 1,174.45, with a market capitalization of Rs 2,802.19 crore.
ITC, renowned for its Bingo chips and namkeen, among other offerings, perceives Prataap as a gateway to significant expansion in regional markets, particularly where its own brands face stiff competition from local players.
Responding to queries, an ITC spokesperson stated, “We do not comment on market speculation.” Prataap Snacks Managing Director Amit Kumat and TA Associates declined to respond, while KKR chose not to comment. Queries sent to Peak XV remained unanswered.
According to the FY23 annual report, Prataap Snacks operates 15 manufacturing facilities, seven of which are company-owned.
Despite a growing market, snacking remains fiercely competitive, with major players like PepsiCo, ITC, Haldiram’s, Bikaji Foods, and Balaji Wafers vying for market share. However, PE funds appear hesitant due to Prataap’s lacklustre performance in the premium segment.
For the quarter ended December 2023, Prataap Snacks reported standalone net sales of Rs 408.31 crore, marking an 8% increase year-on-year. Its quarterly net profit surged to Rs 10.79 crore from Rs 3.42 crore, while FY23 sales totalled Rs 1,652.93 crore with a net profit of Rs 20.26 crore.
ITC, in line with its growth strategy, has been actively exploring acquisitions, having acquired Yoga Bar last year. With its ambitious ITC Next strategy, the conglomerate aims to fortify its portfolio to cater to evolving consumer needs. Insiders suggest that ITC could leverage its robust distribution network to propel Prataap’s brand portfolio forward.