Orkla-owned MTR Foods to acquire 68% stake in Eastern Condiments

Norwegian conglomerate Orkla, through its fully-owned subsidiary MTR Foods, has agreed to acquire a 67.8% stake in Indian spice manufacturer Eastern Condiments for INR 13.6 billion ($190 million).

The deal will pave the way for the merger between MTR Foods and Eastern Condiments.

Eastern Condiments manufactures a mix of non-vegetarian and vegetarian food products mainly in the categories of blended and single spices. Headquartered in Kochi, the Indian spice manufacturer has seven production facilities across four different states in the country and employs nearly 2,955 people.

MTR Foods, on the other hand, has, and will continue to have, a purely vegetarian product range across spices and packaged foods. The company, which has a couple of production facilities in Bengaluru and Pune, has been under the ownership of Orkla since 2007.

According to Orkla, the transaction is being taken up to double its sales in India and will grow its position as one of the top branded food players in the country. Besides, the Norwegian conglomerate said that it will get a platform for further expansion in the spice segment and in adjacent categories.

Orkla said that it has signed agreements through MTR Foods to acquire a stake of 41.8% in Kerala-based Eastern Condiments from members of the Meeran family and to acquire the 26% stake held by McCormick Ingredients SE Asia in the Indian spice manufacturer following the completion of the deals.

The merged company formed by the combination of the Bengaluru-based MTR Foods and Eastern Condiments will be owned jointly by Orkla and the two brothers Firoz Meeran and Navas Meeran, with stakes of 90.01% and 9.99%, respectively.

Presently, the Meeran family has a 74% stake in Eastern Condiments. The deal with the Meeran brothers includes a long-term mechanism for the Norwegian conglomerate to obtain 100% ownership of the joint entity.

Jaan Ivar Semlitsch – Orkla President & CEO said: “This announcement marks a significant step for Orkla towards delivering on its strategy to strengthen our footprint in our core geographies. By joining forces, Eastern and MTR will create a solid platform in the fast-growing Indian market, based on strong local brands.

“MTR has been a great success story for Orkla. Now we look forward to continuing the journey with the Meeran brothers as partners.”

As per Orkla, the enlarged spice business will create a strong base for future growth in the Indian branded food market, courtesy of the positions of Eastern Condiments and MTR Foods in the spices and packaged food categories.

Navas Meeran – Chairman of Eastern Condiments said: “Orkla is known for its strong, local brands and holds leadership positions across multiple FMCG categories in several markets. Orkla has a solid track record of building leading food brands based on a strong organisational culture and company values.

“Together with MTR, and as part of Orkla, we will have a stronger platform for our successful operations.”

The deal to acquire a majority stake in Eastern Condiments is subject to the approval of the Competition Commission of India. The following merger process is anticipated to take nearly 15 months after completion of the acquisition.