“Tata in Talks to Acquire Majority Stake in Haldiram’s; Valuation Remains a Sticking Point”

Tata in Talks to Acquire Majority Stake in Haldiram's; Valuation Remains a Sticking Point

Tata Group’s consumer unit is engaged in negotiations to acquire a majority stake, at least 51%, in the renowned Indian snack food manufacturer Haldiram’s. While a successful deal could position the Indian conglomerate as a competitor to both Pepsi and billionaire Mukesh Ambani’s Reliance Retail, Tata has expressed reservations about Haldiram’s $10 billion valuation, according to sources familiar with the matter.

Haldiram’s, a well-known brand in India, is also exploring the possibility of selling a 10% stake to private equity firms, including Bain Capital.

Tata Consumer Products, which owns Tetley in the UK and has a partnership with Starbucks in India, has expressed concerns regarding the $10 billion valuation, given that Haldiram’s annual revenue hovers around $1.5 billion.

Following reports of these discussions, Tata Consumer shares experienced a more than 3% increase in late Wednesday trading on the Mumbai stock exchange.

While Tata is keen on acquiring a stake exceeding 51%, they have conveyed to Haldiram’s that their valuation request is notably high, as per a third source with direct knowledge of the negotiations. This potential acquisition presents an intriguing opportunity for Tata, expanding its presence in the consumer products market.

Tata Consumer Products, however, refrained from commenting on market speculation, and both Haldiram’s Chief Executive Krishan Kumar Chutani and Bain declined to provide statements.

Haldiram’s, a family-run business with origins dating back to 1937, is celebrated for its crispy “bhujia” snack, which is available at affordable prices across local stores in India. The company holds nearly 13% of India’s $6.2 billion savory snack market, a share comparable to Pepsi’s Lay’s chips.

Haldiram’s products are also sold in international markets such as Singapore and the United States. The company operates approximately 150 restaurants that offer a variety of local and western cuisines.

The potential acquisition of Haldiram’s would significantly enhance Tata’s presence in the consumer products sector, aligning with their broader corporate interests that encompass industries spanning automobiles, aviation, and hospitality.

Haldiram’s Chairman Manohar Lal Agrawal had previously expressed the company’s intent to attract private equity investors and make its debut on the stock market within the next 2-3 years. According to regulatory filings, Haldiram’s reported revenue of at least $981 million in the financial year ending March 2022, though sources suggest its revenue now approaches $1.5 billion, with an annual operating profit to match.

Sources By Agencies

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