Cadila Healthcare to acquire Kraft Heinz India business for US$628m

INDIA – Zydus Wellness, a subsidiary of Cadila Healthcare, fourth largest pharmaceutical group in India will acquire the consumer brand business of Kraft Heinz in India for US$628 million.

The transaction which is expected to close in Q4 FY 19 include children’s milk brand Complan, Glucon D, Nycil and Sampriti Ghee.

An Economic Times report reveals that the acquisition will also include two large manufacturing facilities of Heinz India in Aligarh and Sitarganj and teams devoted to operations, research, sales, marketing and support.

According to the company, the acquisition has an attractive fit in terms of well-entrenched brands in the fast growing categories of food, nutrition and skin care as well as complementary distribution capabilities.

The brands are said to be well entrenched in the fast-growing categories of food, nutrition and skin care as well as complementary distribution capabilities.

In a filing, the company said the deal will be funded by a mix of debt and equity from leading private equity firms.

“This valuation includes net working capital of US$5.45 million, cash of US$2.04 million and assumes no debt.

The transaction is expected to close in Q4 FY19, subject to regulatory approvals,” it said in a statement.

“With this acquisition, the turnover of Zydus Wellness will be approx.US$232.03 million, making it one of the strongest players in the fast-growing consumer healthcare market.”

Heinz India posted revenue of around US$156.96 million in the year ended 30 June 2018.

Kraft Heinz has a combined strength of five manufacturing facilities, 1,800 distributors and nearly 2 million customer touchpoints, a deal that works to unlock synergies in distribution and portfolio.

Dr. Sharvil Patel, Chairman, Zydus Wellness said: “This acquisition will be an ideal addition to Zydus Wellness, supporting our aspirations to grow in the consumer wellness space by providing multiple choices to consumers.”

Heinz India is a subsidiary of the US-based Kraft Heinz while Cadila Healthcare holds a majority stake in Zydus Wellness.

Zydus Wellness has brands like Sugar Free, EverYuth and Nutralite and the development grants it an opportunity to broaden its portfolio and invest in ‘healthy’ brands.

Kraft Heinz in September said it had decided to sell the European holding company that operates the Indian business, requiring the buyer to absorb the tax losses of that entity, registered in Italy.

Coca-Cola was among the top bidders for the Kraft Heinz deal including a formal offer for the European entity but Cadila’s offer for the Indian business was reported to be 10-15% higher.

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