Agro Tech To Buy Del Monte Foods With Bharti Enterprises Becoming Second Biggest Shareholder

Agro Tech Foods Ltd. is set to acquire pasta and sauces maker Del Monte Foods Pvt. through a share swap deal in a bid to create a diversified processed food portfolio.

Through this transaction, Agro Tech Foods will take over 100% stake of Del Monte Foods, which is currently owned by Bharti Enterprises and Del Monte Pacific. Both shareholders will get stake in Agro Food Tech, as part of the transaction.

Bharti owns 59.29% share in Del Monte Foods, while the remaining 40.7% is owned by DMPL India. Post the transaction, Bharti Enterprises will become the second largest shareholder.

Additionally, Agro Tech will acquire an exclusive, perpetual license for the Del Monte brand in India, ensuring long-term access to this trusted brand for its growing consumer base.

As part of the deal, Agro Tech Foods, backed by private equity firm Samara Capital, will issue 1.33 crore equity shares of the company with a face value of Rs 10 each at Rs 975.5 per share on a preferential basis to the current shareholders, according to an exchange filing.

The share swap values the deal at Rs 1,300 crore, according to disclosures made to exchanges.

The acquisition is expected to conclude within nine months following necessary regulatory clearance.

As of March 2024, the turnover of the company stood at Rs 546.68 crore, which is flat compared to FY23 and up 22% from FY22.

Del Monte Foods' competition includes major players such as HUL, Nestle India, ITC, Dabur, Danone, Godrej Agrovet, and Patanjali Ayurved, among others.

"The strategic transaction is expected to further enhance Agro Tech Foods' presence across retail and food services sectors, expanding its reach to traditional retail, modern retail, quick-service restaurants and food services customers," the company said in a statement.

As part of this transaction, Agro Tech Foods will also gain access to Del Monte’s manufacturing and R&D facility in Hosur, Tamil Nadu and in Ludhiana, Punjab.

Separately, Agro Tech Foods board has approved a proposal to rename Agro Tech Foods as “Sundrop Brands Ltd,” reflecting its focus on consumer-branded packaged foods.

The company also announced key leadership changes— Nitish Bajaj will join as Group Managing Director, bringing extensive experience in consumer products, while Om Prakash Manchanda has been appointed as Non-Executive Independent Director. While Bajaj was CEO of consumer products division at Piramal Pharma, Manchanda was managing director of Dr Lal Path Labs.

Asheesh Kumar Sharma, currently Managing Director and CEO of Agro Tech, will transition to the role of Executive Director and CEO for the Sundrop and Act II businesses.