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Dabur becomes Badshah Masala’s major stakeholder in Rs 587cr growth-driven deal

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Dabur has inked definitive transaction deals to acquire a majority stake in Badshah Masala. The deal is worth Rs 587-crore.

Dabur has announced the signing of formal transaction agreements to acquire a 51% stake in Badshah Masala. This purchase is consistent with Dabur’s strategy goal of growing its food business to Rs 500 billion in three years and expanding into new adjacent categories.

This also marks Dabur’s foray into India’s branded spices and seasoning sector, which is worth over Rs 25,000 crore. Badshah Masala is a company that manufactures, markets, and exports ground spices, blended spices, and seasonings.

Dabur is purchasing a 51% share in Badshah for Rs 587.52-crore, less proportionate debt as of the closing date, valuing the Badshah firm at Rs 1,152-crore. This equates to a revenue multiple of about 4.5x and an EBIDTA multiple of approximately 19.6x of FY2022-23 anticipated financials.

Dabur India chairman Mohit Burman stated in a statement announcing the purchase, “The Indian spices and seasoning sector is a vast and lucrative market. Badshah Masala is a significant participant in this market. Our investment in Badshah Masala will help the company grow and continue to produce unrivaled quality goods. As we continue to strengthen our Foods business, this purchase will expedite our growth plan. We plan to expand our business internationally by leveraging our foreign market presence.”

Dabur India Group director PD Narang stated, “In the first year, the deal is projected to be cash EPS neutral, then accretive. The transaction is scheduled to be finalized this fiscal year. According to our agreement, we would purchase the remaining 49% stake in five years.”

Dabur India CEO Mohit Malhotra added,  “Branded Spices market in India is expanding at healthy double digits, powered by increased consumption, upgradation from unbranded to branded, and growing desire for regional tastes across states.”

The market is controlled by regional companies and has tremendous future development potential. Dabur already has a Foods portfolio and sees ground and blended spices as a good complement to it. Dabur’s wide distribution reach will benefit the Badshah portfolio.

Hemant Jhaveri, managing director of Badshah Masala, said, “We are excited to capitalize on more synergies and market possibilities to realize Badshah Masala’s full potential.” “We are happy to join into a strategic alliance with Dabur. Dabur represents trust and legacy, and collaborating with Dabur will assist propel Badshah’s future development potential. Our businesses are a perfect match. This agreement will allow us to accelerate our expansion by adding our goods to Dabur’s diverse portfolio, allowing us to address the demands of customers worldwide.” Advisor to Badshah Masala, Ajay Shah, noted, “This strategic investment of Dabur brings together two powerful Indian brands. This transaction is growth driven, mutually beneficial, value accretive, and advantageous to both firms.”

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