Kraft-Heinz health drink, Complan. (Source: Kraft-Heinz India website)

Zydus, Cadila To Buy Kraft Heinz’s India Portfolio For Rs 4,595 Crore

Zydus Wellness Ltd. and its parent Cadila Healthcare Ltd. have jointly agreed to acquire the Indian portfolio of Kraft Heinz Co., which includes children’s milk drink Complan, for Rs 4,595 crore.

Zydus will fund the acquisition via a mix of debt and equity, the company said in an exchange filing today. In addition to Complan, the brands being acquired include the Glucon D instant energy drink, Nycil talcum powder and Sampriti clarified butter.

The acquisition, the company’s first since buying the Nutralite brand in 2006, will catapult Zydus Wellness’ revenue threefold to around Rs 1,700 crore, the statement said. It involves two large manufacturing facilities in Aligarh and Sitarganj along with the operations, marketing and support teams of Kraft Heinz.

This, along with Zydus’ infrastructure, will give it the combined strength of five manufacturing facilities, 1,800 distributors and nearly 2 million customer touch points, according to Zydus Wellness. “This development offers immense opportunity to broaden our portfolio and invest in brands and products that we believe are most relevant to health-conscious consumers.”

Tata Group, India’s biggest conglomerate, and consumer-goods manufacturer Dabur India Ltd. were also among suitors for the Kraft Heinz businesses, Bloomberg News reported earlier citing people with the knowledge of the matter. Ahmedabad-based Zydus is in talks to raise private equity funding to cover about half of the purchase price, the report said.

Cadila Healthcare’s Involvement

The Rs 4,595-crore price tag will be shared by Zydus Wellness and Cadila Healthcare, the statement said. While Zydus’ shares rose as much as 8 percent after the announcement, the parent’s stock fell 5.2 percent.

“It will not be a significant amount of money that is going to be pushed in by Cadila. It is going to be relatively small compared to the overall size of the transaction,” Shravil Patel, chairman of Zydus Wellness, told BloombergQuint when asked about the rationale behind the drugmaker’s involvement in the deal. “It will be done through a rights issue.”

The parent holds 72 percent in Zydus Wellness.

Shareholders of Zydus Wellness have significantly benefited from its listing as the stock has since surged 22 times, Patel said. The company brings stable growth with a very strong cash flow, which will benefit Cadila Healthcare as well, he said.

Watch the interview here