Promoters unwilling serve Haldiram Snacks on a platter

Be it salty snacks or confectionery, Haldiram brand has its own identity. Global admirers are also becoming a part of its fan base. Private equity firms worldwide are in a rush to acquire Haldiram, yet the promoters remain unyielding.  There are currently two offers on the table, each valuing the company at $8.5 billion, that are being considered for the acquisition of a controlling stake in Haldiram Snacks Food Pvt Ltd (HSFPL). This company is responsible for operating under the popular Haldiram brand. In essence, these offers involve purchasing a majority ownership in the company, giving the buyer significant influence over its operations and decision-making processes.

Some of the largest private equity funds globally, including Blackstone along with Abu Dhabi Investment Authority (ADIA) and Singapore’s GIC, are interested in acquiring a 76% stake in Haldiram’s. They have put forward a valuation of $8.5 billion for the company. This means they are offering to purchase a significant portion of Haldiram’s ownership, giving them a controlling interest in the company, and they have determined its value to be $8.5 billion.

In contrast, Bain Capital has partnered with Temasek from Singapore to rival Blackstone’s consortium. Reports suggest that Bain Capital and Temasek have submitted a bid for a controlling interest in Haldiram Snacks, with a valuation ranging between $8 billion to $8.5 billion.

So what’s so special about Haldiram’s that there’s a frenzy to acquire it?

Haldiram’s has captured nearly 13% of the snack market in the country, indicating a significant presence in this sector. While the company’s origins lie in the snacks industry, it has diversified its offerings over time to include a wider range of products beyond snacks. This diversification strategy has enabled Haldiram’s to expand its business beyond its initial focus and cater to a broader consumer base.

Presently, Haldiram’s has a diverse product portfolio comprising over 100 items available for sale across India. Additionally, the brand has expanded its reach beyond the Indian market, establishing a presence in the United States and Europe as well. This indicates the company’s global expansion strategy, aiming to tap into international markets and cater to a wider audience beyond its home country.

The company’s operations are divided into two primary segments: packaged food and the restaurant business. Packaged food generates the majority of the company’s revenue, contributing 85% to its overall earnings. On the other hand, the restaurant business makes up the remaining 15% of the company’s revenue. This breakdown indicates the significant role of packaged food in driving the company’s financial performance, with the restaurant segment also playing a notable but relatively smaller part.

The company has established manufacturing plants in Noida and Rudrapur to produce its products. Furthermore, it manages a network of restaurants across various regions, including Delhi-NCR, Uttar Pradesh, Haryana, and Punjab, through different subsidiaries or associated group entities. This operational setup enables the company to both manufacture its goods efficiently and distribute them through its restaurant outlets across multiple locations.

With the domestic snack market valued at approximately Rs 42,700 crore in 2023 and projected to surge to about Rs 95,500 crore by 2032, reflecting an annual growth rate exceeding 9%, the company stands in a robust financial position with promising growth prospects. Consequently, this makes the company an appealing investment option due to its strong performance and anticipated expansion opportunities.

So where does the deal stand?

The Agarwal family, who are the promoters of Haldiram’s, are dissatisfied with the proposed valuation of the deal. This isn’t the first instance where talks of a stake sale have surfaced. Earlier, in September 2023, discussions took place with Tata Consumer regarding the sale of a 51% stake. However, the Tata Group found the valuation requested by the promoters, which was approximately $10 billion, to be unacceptable.

It’s important to mention that last year, the family made the decision to merge two segments of their business—those in Delhi and Nagpur. However, the Kolkata division is excluded from this merger plan. While this merger proposal has been granted approval by both the NCLT and CCI, it is expected to take 3-4 months to finalize. Once this process concludes, a decision regarding the deal can be reached.