The Meeran family that runs leading spices maker Eastern Condiments has agreed to sell its majority stake to Norwegian packaged food major Orkla for over ₹1,350 crore, the family said in a statement.
The Kochi-based Eastern Condiments sells a variety of spices, pickles and veg and non-veg ready-to-eat items under the brand name of Eastern and is the largest exporter of spices from the country.
Under the agreement, the Meeran brothers — Firoz and Navas Meeran — who now own 74 per cent in the company, will sell 41.8 per cent to Orkla, which owns MTR Foods.
The acquisition will be done through MTR, and the Norwegian company will also buy out the McCormick Ingredients SE Asia, the foreign investor in Eastern that owns 26 per cent. It will take the ownership in the first step of the transaction to 67.8 per cent for ₹1,356 crore, valuing Eastern at ₹2,000 crore.
Later, when Eastern is merged with MTR, the Meerans will exit Eastern by selling their remaining 32.2 per cent and in return will get 9.99 percent of the merged entity, the statement said.
The deal completion or merger is expected to be over in 15 months.
The domestic spices industry is around ₹22,000 crore and has been annually clipping at 13 per cent over the past eight years ended March 2020.
After the deal, Eastern will be merged with MTR, and Orkla hopes to double its sales in the country with the Eastern deal. MTR under Orkla has grown five-times since 2007.
“Following the completion of these transactions, a merger application will be filed with the intention of merging Eastern into MTR,” the statement said. It added that “the merged company will be jointly owned by Orkla and the two brothers — Firoz and Navas Meeran — and will own 90.01 per cent and 9.99 per cent, respectively.”
Eastern has seven production facilities in four states and employs around 2,955 people.
Orkla is a leading supplier of branded consumer goods and concept solutions to the consumer, out-of-home and bakery markets in the Nordics, Baltics and selected markets in central Europe and India.
Listed on the Oslo Stock Exchange, Orkla is listed is headquarters in Oslo. In 2019, the group had a turnover of NOK 43.6 billion NOK (Norwegian currency), and employs 18,350.
The acquisition expands Orkla”s already strong presence in the country”s food and spices segment through MTR Foods, which it had acquired in 2007 and is a fully-owned subsidiary now. With this move, Orkla hopes to double its sales in the country.
Navas Meeran, chairman of Eastern, said, “Orkla is known for its strong, local brands and holds leadership positions across multiple FMCG categories in several markets. Together with MTR, and as part of Orkla, we will have a stronger platform for our successful operations.”
Anshul Agarwal, executive director at Avendus Capital, said Eastern and MTR combined have significant synergy potential in terms of product portfolio and geography.