In an effort to increase its market share in the potato chip industry, Indian snack manufacturer Haldiram’s is in negotiations to pay $350 million for the majority of Prataap Snacks. Although a valuation has not yet been agreed upon, it may be more than the price of Prataap’s stock, as the talks are still in their early stages.
According to two persons with firsthand knowledge of the situation, Indian snack manufacturer Haldiram’s is negotiating to pay $350 million for most of its listed competitor, Prataap Snacks, to increase its market share in the potato chip industry.
Although a valuation has not yet been agreed upon, it may be more than the price of Prataap’s stock, as the talks are still in their early stages. According to the unnamed sources, Haldiram is considering acquiring a majority ownership of at least 51%, although a precise figure has not been determined because the talks are private.
Prataap is well-known for its Yellow Diamond brand of chips, which it markets against other snack manufacturers as well as Pepsi’s Lay’s brand. The fried chip market is still dominated by small, unorganized food vendors.
The sources further stated that Peak XV Partners, a venture capital firm that was formerly known as Sequoia Capital India, controls about 47% of Prataap Snacks and plans to completely sell its ownership in Prataap.
According to the Economic Times, Amit Kumat, CEO of Prataap, Krishan Kumar Chutani, CEO of Haldiram, and Peak XV all declined to comment.
Prataap debuted on the stock market in 2017 and generated approximately $200 million in revenue in the previous year. It claims to sell more than 12 million packets of its salty snacks—which start at just 5 rupees, or 6 US cents—every day.
Unlisted Haldiram’s, a family-owned company that was established in 1937, is a far bigger producer of packaged snacks with over $1 billion in revenue and has 150 restaurants around the country. In acquisition talks with conglomerate Tata Group and other strategic investors, it wished to bring on board, the company reportedly sought a $10 billion valuation, according to Reuters last year. However, the talks fell down due to valuation concerns.
“A partnership with Prataap will enable Haldiram’s to enter the potato chip market. One of the publications stated, “Consumers frequently choose western-flavored snacks over native ones.
Prataap operates 14 manufacturing facilities in nine different Indian states. The fried snack market in India is dominated by smaller, unorganized businesses, but branded goods have become more popular recently as consumers have become more health-concerned and have more money to spend on packaged goods.
The creators of Prataap and Peak XV were aiming to sell a stake to investors and conglomerates, according to a Dec. 19 article on India’s Moneycontrol news website. However, the post did not identify the purchasers.
In India, a price-conscious market, local snack manufacturers like Prataap have suffered from inflationary pressures and growing competition; as a result, their stock price is still close to where it was when they listed in 2017.
In a November financial report, Prataap projected that the Indian snack market was worth $5.2 billion, with annual growth of 14%.
