Advent to buy control of Indian snacks producer DFM
Advent International has agreed to acquire a 67.9% stake in Indian snacks manufacturer DFM Foods from investors including WestBridge Capital for INR8.52 billion ($118.7 million). It has made an open offer to buy a further 26% of the company for INR3.26 billion.
The private equity firm will pay INR249.50 per share for 34.1 million shares held by WestBridge and the promoters. It wants to acquire up to 13.1 million shares from public shareholders for the same price, according to a filing. DFM Foods stock rose 7.7% on September 9 to INR284.40, a 16-month high. Following the completion of the open offer, the company will remain listed.
WestBridge owns 24.8%, having invested INR645 million in 2014. Two years later, it sought to assume control of DFM through a INR3.4 billion deal that would have taken its interest to 51%. This open offer was unsuccessful.
DFM is best known for Crax Corn Rings, which were introduced in 1984. The company spun out from Delhi Flour Mills in 1993 and remains under the control of the Jain family. It now produces a range of snacks under the Crax brand, including corn rings, corn puffs, wheat puffs, and crispy sticks. In addition, DFM manufactures namkeens – savory snack foods featuring bhujiyas, daals, mixtures and nut mixes.
DFM generated INR4.84 billion in revenue for the 12 months ended March 2019, up from INR4.25 billion a year earlier. Over the same period, net profit rose from INR233 million to INR328 million.
“DFM is a leader and innovator in a large, fast-growing segment of the Indian food and beverage industry,” said Shweta Jalan, head of India at Advent, in a statement. “The company has strong brand awareness and distribution and numerous opportunities for continued growth.”
Sahil Dalal, a director with the private equity firm, added that India’s food and beverage market remains fragmented and regionally oriented. They will work with DFM to build a larger and broader business through organic expansion and targeted M&A.
Advent closed its latest global fund in June at $17.5 billion, of which $3 billion has been earmarked for deployment in Asia. The DFM transaction is the firm’s seventh in India in the past four years. The sixth closed last week, with Advent committing INR10 billion to Aditya Birla Capital as part of a INR21 billion round also featuring Premji Invest and the promoters.
Other Indian portfolio companies include packaging industry supplier Manjushree Technopack, innerwear manufacturer Dixcy Textiles, wealth manager Ask Group, and the consumer products unit of Crompton Greaves.
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