ITC to acquire spices major Sunrise Foods

KOLKATA: FMCG-to-hospitality-to-tobacco major ITC has entered into a share purchase agreement (SPA) to acquire 100% of the equity share capital of Sunrise Foods (SFPL), a company primarily engaged in the business of spices under the trademark ‘Sunrise’. The deal size though was not being revealed yet, but as per the available information, Sunrise has a turnover of around Rs 600 crore and a paid-up equity of Rs 4 crore.
Kolkata-based Sunrise is a market leader in eastern India in the fast-growing spices category with a rich heritage and brand legacy of over 70 years.
SFPL though has not disclosed the deal value said that it has an EBIDTA of Rs 105-110 crore (generally, the valuation comes to three-four times of EBIDTA). Mayank Bharadwaj, MD and the third generation of the family, said that the company is exiting because they wanted to bring in professionalism in the company which ITC can do.
“Going by the market value of the brand, the deal could be worth anywhere between Rs 300-400 crore,” added an analyst.
Founded by Sharma family, Sunrise has manufacturing facilities, spread across India, including modern factories in Kolkata, Agra, Jaipur, Bikaner, Sumerpur and Erode. The spice giant in eastern India has made inroads into the rest of India, Bangladesh and Nepal. “The company is poised to engage in lucrative business opportunities in countries such as Japan, France, Germany, Thailand, Malaysia, Singapore, the US, the UK and the west Asia,” a source close to the company added.
The proposed acquisition is aligned with ITC’s strategy to rapidly scale up its FMCG businesses in a profitable manner, leveraging its institutional strengths such as deep consumer insight, wide distribution network, agri-commodity sourcing expertise, cuisine knowledge, strong rural linkages and packaging know-how.
It is also learnt that J M Financial was the banker and Khaitan & Co was the legal advisor for SFPL for the deal.
ITC’s Aashirvaad range of spices is already a market leader in Telangana and Andhra Pradesh and the company is one of country’s leading producers and exporters of high-quality food. “The proposed acquisition will augment the company’s product portfolio and is aligned to ITC’s aspiration to significantly scale up its spices business and expand its footprint across the country,” the company added.
Commenting on acquisition, ITC has said that the deep consumer connect and distribution strength of SFPL in the focus markets, together with synergies arising out of the sourcing and supply chain capabilities of the company’s agri business and its pan-India distribution network, will provide significant value creation opportunities for the company.
“The proposed transaction is also in line with ITC’s philosophy of enhancing the competitiveness of agri value chains in India while making a meaningful contribution to enhancing farmer incomes. Finalisation of the SPA along with related processes was completed during lockdown conditions, reflecting the company’s agility and resilience in dealing with the new normal,” it added.