Indian spice major MTR to be sold out

By siliconindia   |   Tuesday, 12 December 2006, 18:30 IST
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Mumbai: MTR, the Bangalore-based processed food manufacturing company may be finalizing a deal with the US-based McCormick. The deal worth Rs 350-400 crore is most likely to complete in the next two weeks. Sources close to the deal informed that Indian players such as Tata Coffee, Godrej, ITC, Wipro and interested private equity players such as Blackstone, Indivision and Actis opted out due to the high valuations of the company. “It did not make sense for the Indian players to pay Rs 300 - 350 crore, and hence the reason behind their backing out. However, for a foreign player, trying to make an entry into India, the price may look attractive,” said the source reported as per economic times. However, SNS Subramanya, investor director, MTR refused to comment on the deal just saying that a transaction with a buyer was being processed. The deal makes immense sense for McCormick, a leader in the manufacture, marketing and distribution of spices, seasonings and flavors. The Indian flavors is what is was lacking in its offering which has a lot of demand in the foreign markets. Also if the manufacturing is outsourced from India, the US-based company would manage to save much of its current manufacturing costs. McCormick in spite of the costly investment, would be benefited as it get MTR as the entry point for the Indian market, which is opening up potentials both in the processed foods and retail sectors. The company’s customers range from retail outlets and food service providers to food processing businesses with close to 8,000 employees. N.M.Rothschild, the investment bankers appointed by MTR, had estimated a value of 300 crore on the company when it called for bids earlier this year. The Maiya family controls 59 per cent stake in the company directly and indirectly, with JP Morgan holding 26 per cent stake. Another fund, Aquarius, holds 14-15 per cent. MTR Foods is a leading player in the ready-to-eat and instant mix segment in India has attracted some of the biggest players in the Indian market for a buyout. Most discussions have failed because the company has been demanding a high price. Two months ago, Dabur Foods and Godrej Beverages & Foods opted out of the race after finding the asking price too high. MTR Foods is a well-known processed food manufacturer in India with exports to US, UK and Australia.

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