MTR Foods, a 80 year-old Bangalore based company well known for its ready-to-cook, ready-to-eat delicious vegetarian products, ready mixes and spices, said on Tuesday that Orkla SA, a big ticket Norwegian branded consumer firm, had acquired it for $ 80 million in an all-cash deal.
Hindustan Times had reported the deal in Tuesday's editions, with sources estimating the deal at $100 million.
The acquisition would provide market opportunities for MTR's 270 products in Europe, targeting Indian expatriates. Likewise, it would facilitate Orkla's entry into the Indian market.
The acquisition was announced on Tuesday by Orkla SA through a notification to the stock exchange. However, the notification did not disclose the price of acquisition. The deal would be subject to the Indian regulatory approvals including the Foreign Investment Promotion Board (FIPB).
A spokesman for MTR Foods said the acquisition was signed by Chairman Mr Sadanand Maiya and Orkla Asia Pacific Pte Ltd, a subsidiary of the $8.8-billion European firm, in Singapore on February 9th. "It is an all cash deal and we will make a phased pull out over a period of two years. Mr Maiya will disclose all the details in a couple of days," the spokesman said.
Mr Maiya, who individually holds 40 per cent of the company's equity, will exit the business along with his relatives and friends who collectively hold 19 per cent of the stake. The two strategic investors - JP Morgan Stanley and Aquarius India Fund, holding 26 per cent and 15 per cent respectively, will also exit by selling their stake to Orkla subsidiary.
The notification to the stock exchange said in 2006, MTR Foods' operating revenues totalled approximately NOK 230 million and the workforce was equivalent to 1,079 man-years. "As a result of this acquisition we will be able to assess the Indian market as a possible future growth platform for Orkla's Branded Consumer Goods business at close quarters.
MTR Foods is located in an interesting, growing market. We expect to spend some time learning and assessing the situation before any final decisions are made concerning further strategic investments in India," says Executive Vice President Torkild Nordberg, who is responsible for Orkla's Branded Consumer Goods business.
Orkla's Branded Consumer Goods business consists of Orkla Foods and Orkla Brands. The Nordic region and the Baltic States are its domestic market. Orkla's Branded Consumer Goods business also has strong market positions in Poland, the Czech Republic, Austria, Romania and Russia. In 2005, annual operating revenues totalled NOK 19,737 million and the workforce was equivalent to 13,466 man-years.
The Branded Consumer Goods business is not currently engaged in direct marketing activities in Asia. Orkla is otherwise well represented in the region through Sapa, Borregaard, Elkem and its minority interest in Jotun, the notification said.