India's Competition Watchdog Approves Majority Stake Sale in Prataap Snacks

The Competition Commission of India (CCI) has given the green light to the acquisition of a 72.8% stake in Prataap Snacks by Alpana Sanjay Dangi's Authum Investment & Infrastructure Ltd. and Mahi Madhusudan Kela. This strategic move, valued at approximately ₹846.6 crore (approximately US$101 million), marks a significant shift in ownership for the Indore-based company, known for its popular Yellow Diamond brand of chips.

The acquisition involves purchasing shares from Peak XV Partners, a private equity firm previously known as Sequoia Capital India. After this transaction, Authum will hold a 42.31% stake in Prataap Snacks, enhancing its influence over its operations and future direction. The firm aims to nurture and expand Prataap Snacks, maximizing value creation for all stakeholders.

In addition to the initial purchase, Authum and Kela have initiated an open-market offer to acquire an additional 26% stake at ₹864 per share (US$10.3). This offer is designed to attract existing shareholders and is expected to consolidate their position within the company further. The open offer price represents a discount compared to recent trading prices, reflecting market conditions and investor sentiment.

Prataap Snacks, established in 2003, has grown to become one of India's fastest-growing snack food companies. It competes with Pepsi's Lay's brand and other snack-makers in a market where local, unorganized food sellers still dominate the fried chips segment. The company operates 14 manufacturing plants across nine states and supplies products to 23 of the 28 states and several union territories.

The acquisition comes amid a wave of activity within the Indian snacks sector. In August 2024, Bikaji Foods acquired a 55% stake in Ariba Foods for ₹604.9 million (US$7.2 million), indicating robust investor interest in snack food companies. Ariba Foods specializes in Indian snacks and sweets and is also based in Indore, showcasing the region's growing prominence in the food industry.

Despite recent fluctuations in share prices, Prataap Snacks experienced a notable surge of approximately 20% on the day following the deal's announcement. However, it remains to be seen how this acquisition will impact its overall performance for the year, as shares have declined by about 4.5% thus far in 2024.

The completion of this transaction is anticipated within six months, contingent upon meeting regulatory requirements and other conditions precedent. As Prataap Snacks transitions into an associate company of Authum Investment, stakeholders are keenly observing how this partnership will shape the future of one of India's leading snack brands.

In conclusion, this acquisition signifies a pivotal moment for Prataap Snacks and highlights investors' increasing interest in India's snack food market. With strategic investments aimed at expansion and value creation, both Authum Investment and Mahi Madhusudan Kela are poised to play influential roles in guiding Prataap Snacks toward sustained growth and success in an evolving industry landscape.