FMCG major Dabur has inked an agreement to acquire Badshah Masala, which makes, markets and exports ground spices, blended spices and seasonings.
The move comes two years after Dabur rival ITC Ltd sought to expand its presence in the food business with the acquisition of spice maker Sunrise.
Dabur said Wednesday it is buying a 51% stake in Badshah Masala for Rs 587.52 crore, less proportionate debt as on the closing date, at an enterprise valuation of Rs 1,152 crore ($94.5 million).
This translates to a revenue multiple of around 4.5x and EBIDTA multiple of around 19.6x of FY2022-23 estimated financials of Badshah.
Badshah had revenue of Rs 189.1 crore for the year ended March 2022. This means the company is projecting to clock revenue of Rs 256 crore this year.
This acquisition is in line with Dabur’s intent to expand its foods business to Rs 500 crore in three years and expand into new adjacent categories. This also marks Dabur’s entry into the over Rs 25,000 crore branded spices and seasoning market in India.
Dabur India chairman Mohit Burman said: “We intend to leverage our international market presence to grow this business globally.”
“The transaction is expected to be cash EPS neutral in the first year and accretive thereafter. The acquisition is expected to be completed within this fiscal. As per our agreement, we will acquire the balance 49% shareholding after five years,” Dabur India Group Director PD Narang said.
Dabur India CEO Mohit Malhotra said the branded Spices market in India is growing at healthy double digits, led by increasing consumption, upgradation from unbranded to branded and growing preference for regional flavours across states. The market is dominated by regional players and holds significant potential for growth in the future, he said.
He added that Dabur has an existing foods portfolio and views ground and blended spices as a good addition to this portfolio.
Dabur India’s FMCG portfolio includes nine brands: Dabur Chyawanprash, Dabur Honey, Dabur Honitus, Dabur Pudin Hara and Dabur Lal Tail in the healthcare space; Dabur Amla, Dabur Red Paste and Vatika in the personal care category; and Real in the food and beverages space.
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