ITC considers acquisition of 47% stake in Prataap Snacks, says report

22 Feb 2024 , 10:47 AM

ITC intends to purchase a 47% share in Prataap Snacks, which manufactures the popular ‘Yellow Diamond Chips’.

Following this development, shares of Prataap Snacks rallied as much as 15% to an intraday high of ₹1,344.65 per piece. 

It was originally reported in December that Prataap Snacks promoters were in talks to sell a majority interest in the snack company. According to the article, Sequoia Capital, a member of the promoter group that owns around 47% of the Indore-based firm, is spearheading the negotiations.

This move is viewed as a deliberate measure by ITC to increase its position in regional markets, utilising Prataap’s strong presence in these areas. Prataap Snacks also distributes traditional Indian namkeens under the name Avadh.

The decision to pursue the purchase comes after Prataap Snacks’ talks with Haldiram’s, another key player in the snacks market, broke through owing to a value mismatch, according to the report. Similarly, discussions with Bikaji Foods, another snack maker, did not go through.

If the stake acquisition is successful, it will result in an open offer for an additional 26% stake of the firm.

Prataap Snacks made its stock market debut in 2017, but has since provided a negative return of around 8.34%.

In December 2023, Prataap Snacks recorded net sales of ₹408.31 Crore, up 8.08% from the previous year. Its net profit for the December quarter was ₹10.79 Crore, up 215.39% from December 2022.

ITC’s strategic approach, known as the ITC Next strategy, is to create a future-ready product range that meets changing customer expectations. With the acquisition of Prataap Snacks, ITC could use its extensive distribution network to promote Prataap’s brand portfolio, therefore boosting its market position.

At around 10.43 AM, Prataap Snacks was trading 10.15% higher at ₹1,296 per piece, against the previous close of ₹1,176.55 on NSE. 

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