Kraft Heinz to sell Indian portfolio to Zydus Wellness for $4,595 cr

24 Oct 2018


US food and beverages major Kraft Heinz Company is selling its Indian portfolio, including Complan, Glucon-D, Nycil and Sampriti, to Zydus Cadila for about Rs4,595 crore (approximately $625 million).

The sale involves Kraft Heinz’s two large manufacturing facilities in Aligarh and Sitarganj along with the operations, marketing and support teams of Kraft Heinz.

This will take Zydus’ infrastructure to 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.”

Zydus Wellness Ltd and its parent Cadila Healthcare Ltd have jointly agreed to acquire the Indian portfolio of Kraft Heinz Co. Zydus will fund the acquisition via a mix of debt and equity, the company said in an exchange filing today.

“The sale of this niche business fits into our overall global growth strategy and our focus on investing in and growing brands within our core categories,” said Bernardo Hees, chief executive officer of Kraft Heinz. “India continues to be a key market for Kraft Heinz, and in fact, we’re strengthening our commitment to expand and grow our Heinz sauces and Kraft business in India.”

At current exchange rates, this business generates approximately $150 million (Rs1,150 crore) in net sales and approximately $30 million (Rs225 crore) in adjusted EBITDA.  

Kraft, however, said the sale will not have a material impact on its annual financial results.

Under the terms of the agreement, Kraft Heinz will sell to Zydus Wellness Limited (jointly with Cadila Healthcare Limited), 100 per cent of its equity shares in Heinz India Private Limited, which is comprised of Complan, Glucon-D, Nycil and Sampriti brands, and two manufacturing facilities, with approximately 900 employees associated with these brands and operations.

The transaction is expected to close in early 2019, subject to regulatory approvals of the Competition Commission of India and other customary closing conditions.

JP Morgan Securities LLC served as exclusive financial advisor to Kraft Heinz for this transaction, while Cyril Amarchand Mangaldas and Gibson, Dunn & Crutcher served as legal advisors for Kraft Heinz.

The Kraft Heinz Company is the third-largest food and beverage company in North America and the fifth-largest food and beverage company in the world

Zydus Wellness Ltd (ZWL) is the listed entity of the Zydus group and is one of the leading companies in the fast growing Indian consumer health market. The company has grown over the years on the back of pioneering brands like Sugar Free, EverYuth and Nutralite and consumer-centric innovations.

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