INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

GODREJ FOODS SET TO BUY NUTRINE FOR RS 270 CR

GODREJ Foods and Beverages, the foods unit carved out of two other Godrej group companies, is set to buy Nutrine Confectionery for about Rs 270 crore in the largest single-brand acquisition in the fast moving consumer goods industry, people familiar with the matter said. Mumbai-based Godrej Foods will be joined in this transaction by IL&FS Investment Managers, the private equity fund promoted by IL&FS Financial Services. This will be the first instance of a private equity (PE) fund teaming up a large business house for a big domestic buyout.

Godrej and IL&FS and other associates will buy 100% of Nutrine Confectionery for about Rs 270 crore, valuing the Chittoor-based firm 1.6 times its revenue and about 10-11 times its earnings before interest, depreciation and amortisation (EBITDA). IL&FS is believed to have contributed about Rs 90 crore to the transaction.

Bangalore-based MAPE Advisory Group were advisors to Godrej, people close to Nutrine said. RSM & Co conducted the due diligence on behalf of Godrej, they added. A senior Godrej group official declined comment.

The deal marks a complete exit from the sugar boiled confectionery business for the descendants of B Venkatrama Reddy, who founded the company in 1952. Nutrine has since then grown into a household name especially in the southern region of the country.

The acquisition is the largest-ever single brand deal in the fast moving consumer goods industry dwarfing Marcio's purchase of Nihar coconut oil from Hindustan Lever for about Rs 216 crore.

Other deals such as Godrej's buy out of Transelektra (Rs 105 crore), Colgate's acquisition of Cibaca (Rs 131 crore) and Dabur's deal with Balsara Hygiene (Rs 178 crore) were smaller in size.