Heinz India’s business comprises the brands Complan, Glucon D, Nycil and Sampriti Ghee, two large manufacturing facilities in Aligarh and Sitarganj and teams devoted to operations, research, sales, marketing and support. It also has a strong distribution network of over 800 distributors and over 20,000 wholesalers covering 29 states.
For the four brands, Heinz India recorded revenues of about Rs 1,150 crore and earnings before interest, taxes, depreciation and amortisation (EBIDTA) of about Rs 225 crore for the 12 months period ending June 30, 2018. Following this acquisition, Zydus Wellness will have consolidated revenues of about Rs 1,700 crore.
The transaction is proposed to be financed by a mix of equity and debt. Select leading private equity firms have committed to partnering the transaction by way of equity support. The transaction is expected to be earnings per share (EPS) accretive.
The acquisition has an attractive fit in terms of well-entrenched brands in the fast growing categories of food, nutrition and skincare as well as complementary distribution capabilities. The acquired brands have a strong market presence and a legacy of over 50 years.
Glucon D, first launched in 1933, is the leader in the energy drink segment in India. Complan, a household brand in the health food drink category, was introduced in India in 1969 as a milk based health food drink. Today, Complan is considered to be one of the strongest brands associated with nutrition and health benefits and has a high spontaneous recall of nearly 90 per cent in India. Launched in 1951, Nycil is the number one prickly heat powder with a pan-India presence. Sampriti premium ghee offers immense opportunities for growth in the large retail segment.
Speaking on the development, Sharvil Patel, chairman, Zydus Wellness Ltd, said, "This is an exciting time. 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. It leverages our group’s heritage, innovation track record, combined brand offerings and capabilities to meet and exceed our consumers' evolving health and wellness needs. This acquisition will be an ideal addition to Zydus Wellness, supporting our aspirations to grow in the consumer wellness space by providing multiple choices to consumers. We also look forward to welcoming the employees, consumers, partners and all stakeholders of Heinz India to the Zydus family.”
“For our parent company and Zydus Wellness, science and innovation have always been the strength and we strongly believe that we will further enhance value to all these marquee brands. Our ability to merge the consumer and ethical pharma offerings to create a seamless world of wellness will unlock value for these brands,” he added.
With iconic brands like Sugar Free, EverYuth and Nutralite, Zydus Wellness has a strong brand equity in the food, nutrition and skincare markets. This will be the second acquisition for Zydus Wellness following the acquisition of Nutralite, India’s largest selling premium healthy fat spread, in 2006.
The following is how the transaction unlocks value for Zydus Wellness:
Enriches portfolio
Zydus Wellness will be better positioned to strengthen its core business of health food and nutrition, which contributes to more than 80 per cent of its business, with Complan and Glucon-D. Along with its iconic brands, Sugar Free and Nutralite, it will become a consumer wellness player with a strong equity. Nycil also complements its exclusive range of skincare products, Everyuth.
Expands reach
The acquisition will create enhanced infrastructure and distribution reach which will have a combined strength of five manufacturing facilities, 1,800 distributors and nearly two million customer touchpoints.
An ideal mix of science, innovation and consumer health
With a legacy of 66 years in the pharmaceutical industry, Zydus Cadila is known for its innovation and differentiated therapies. Zydus Wellness’ journey in the consumer health business started with Sugar Free, a healthier substitute for sugar in 1988.
Since then, the company has been known for its differentiated products, supported by evidence-based scientific value and innovation. Complan, Glucon D and Nycil align themselves with this core focus and offer immense scope for growth opportunities.
Avendus Capital acted as financial advisor to the company and Khaitan and Co acted as the legal advisor.
