In a major development in the food and beverages industry, Norwegian consumer conglomerate Orkla ASA that also owns MTR Foods is set to acquire one of South India’s leading spice makers, Eastern Condiments. Orkla will pick up 68% stake of Eastern Condiments, and initiate a merger with MTR Foods. In a release, Orkla said that the merger is expected to take 12-15 months, and the merged entity will continue under the MTR brandname.
The business transaction evaluates Kerala-based Eastern Condiments at Rs 2,000 crore. Orkla’s move is reportedly to increase its footprint in India’s branded spice market. Way back in 2007, Orkla had acquired MTR Foods.
The transaction will see MTR acquire 41.8% stake from the Meeran Family, who are the promoters of Eastern. The balance of 26% will be picked up from McCormick Spices which holds the stake.
After the first leg of acquisition, an application to merge Eastern with MTR will be submitted and the merged company will be owned by Orkla ASA and the two brothers — Firoz and Navas Meeran, with a split stake of 90.1% and 9.99% respectively.
"Orkla, through its wholly owned subsidiary MTR Foods Private Limited, has signed agreements to purchase a 41.8 per cent ownership stake in Eastern from members of the Meeran family and to acquire the entire ownership stake held by McCormick Ingredients SE Asia PTE. Ltd, which will give Orkla a 67.8 per cent ownership stake after completion of the transactions. Eastern is currently owned by the Meeran family (74 per cent) and McCormick (26 per cent)," Orkla said in a release.
The merger is subject to approval from the Competition Commission of India.
Eastern Condiments was founded by the late ME Meeran, a Kothamangalam native, in 1983. It was founded in Adimali. Earlier, in 1968, Meeran reportedly founded a company called the Eastern Trading Company, to which the brand's name can be traced to.
Late ME Meeran of Kothamangalam in Kerala founded the brand in 1983 in Adimali. In fact, the brand name traces its roots to the Eastern Trading Company he founded in 1968.
— Nikhil നിഖിൽ (@nikhilnarayanan) September 4, 2020
Eastern is probably is India's largest spices exporter today. pic.twitter.com/rBHTHsRXW8
Eastern also sells ready-to-eat food items, sambar podi and more. It offers a mix of non-vegetarian and vegetarian food products largely in the categories of blended and single spices.
McCormick Spices acquired 26% stake in Eastern for Rs 162 crore from a PE Fund and the Meeran Family. The same year, MTR had lost out in the race to McCormick.
Orkla ASA which is headquartered in Oslo is a major supplier of branded consumer goods in the Nordics, Baltics and a few markets in Central Europe and India.