Haldiram's In Talks To Acquire Majority Stake In Local Chips Maker Prataap Snacks: Report

Prataap Snacks shares zoomed about 13 per cent to their highest levels since 2018 after the news, before paring some gains to close 9.7 per cent higher

Haldiram's is a much larger manufacturer of packaged snacks with revenue of over $1 billion and runs 150 restaurants across the country.

Source : Haldiram's

To expand its presence in the potato chip market, snacks maker Haldiram's is in talks to acquire a majority stake in listed rival Prataap Snacks, which is valued at $350 million, citing people privy to the development news agency Reuters said. After this news, Prataap Snacks shares zoomed about 13 per cent to their highest levels since 2018 after the news, before paring some gains to close 9.7 per cent higher.

Local snack maker Prataap is best known for its Yellow Diamond brand of chips and competes with Pepsi's Lay's brand and other snack-makers in a market where local, unorganised food sellers still dominate the fried chips segment. 

According to the report, the discussions are at an early stage and a valuation has not been discussed, though it could be at a premium to Prataap's stock price. Haldiram's is considering a majority stake of at least 51 per cent, but a final number has not been decided, said the sources.

Venture capital firm Peak XV Partners, formerly known as Sequoia Capital India, owns around 47 per cent of Prataap Snacks and is looking to fully exit its stake in Prataap, the sources added. 

Haldiram's CEO Krishan Kumar Chutani, Prataap CEO Amit Kumat, and Peak XV all declined to Reuters’ requests for comment. 

Prataap made its stock market debut in 2017 and had annual revenues of around $200 million last year. It says it sells over 12 million packets of its salty snacks daily, which are priced as low as Rs 5 (6 U.S. cents). 

Unlisted Haldiram's, a family-run business founded in 1937, is a much larger manufacturer of packaged snacks with revenue of over $1 billion and runs 150 restaurants across the country. Last year, Reuters reported the company was seeking a $10 billion valuation in deal talks with conglomerate Tata Group and other strategic investors it wanted to bring on board, but the talks didn't materialise over valuation concerns. 

"A deal (with Prataap) will help Haldiram's tap the potato chips segment. Consumers often prefer western flavoured snacks over local ones," said one of the sources. 

Prataap has 14 manufacturing plants across nine states. Though smaller unorganised firms dominate India's fried snacks landscape, branded products have boomed in recent years as consumers become health conscious and have higher disposable incomes to spend on packaged goods. 

Prataap in a November earnings report estimated India's snacks market was worth $5.2 billion, growing 14 per cent each year.