Prataap Snacks shares zoom 17% amid Haldiram's acquisition plans

Haldiram's may acquire Prataap Snacks: Noida-headquartered multinational snacks and restaurant chain Haldiram's is currently in preliminary talks to acquire a controlling stake in listed competitor Prataap Snacks, valued at $350 million, in a strategic move to bolster its position in the competitive potato chip market, news agency Reuters reported quoting sources. The shares of Prataap Snacks have climbed 16.63 per cent to an intraday high of Rs 1,450 apiece on the NSE following the news.

The talks, which are still in the early stages, involve discussions about Haldiram's acquiring a majority stake of at least 51 per cent, though the final percentage remains undetermined. While the valuation has not been disclosed, sources suggest it could command a premium to Prataap's current stock price.

In a highly competitive market

Prataap Snacks, recognised for its popular Yellow Diamond brand of chips, faces stiff competition from global brands like Pepsi's Lay's in a market where local and unorganised food vendors dominate the fried chips segment.

Venture capital firm Peak XV Partners, formerly known as Sequoia Capital India, currently owns approximately 47 per cent of Prataap Snacks and is reportedly seeking a full exit from its stake in the company.

Haldiram's seeks to be industry leader

Haldiram's, a family-run business founded in 1937, is a formidable player in the packaged snacks industry, with revenues exceeding $1 billion and a network of 150 restaurants across India. Last year, the company explored a potential $10 billion valuation in deal talks with Tata Group and other strategic investors, but these discussions did not progress due to valuation concerns.

"A deal (with Prataap) will help Haldiram's tap into the potato chips segment. Consumers often prefer western-flavored snacks over local ones," the Reuters report said.

Prataap Snacks, which made its stock market debut in 2017, reported annual revenues of around $200 million last year. Despite its strong market presence, the company's stock price has struggled to rise significantly above its 2017 listing level.

As Prataap and other local snack makers contend with inflationary pressures and increased competition in the price-conscious Indian market, the acquisition could offer strategic advantages and synergies to both companies in navigating the evolving landscape of the country's snack industry.

The shares of Prataap Snacks ended 12.46 per cent higher at Rs 1,398 apiece on the NSE on Thursday, January 18, 2024.