ITC Ltd. has acquired Sresta Natural Bioproducts Ltd. for an upfront consideration of Rs 400 crore. The company has acquired the entire share capital comprising 1.87 crore equity shares of Rs 10 each of Sresta Natural Bioproducts Private Ltd, according to an exchange filing on Friday.
Consequently, Sresta Natural Bioproducts has become a wholly-owned subsidiary of the company and its subsidiaries. Sresta Natural Bioproducts has two wholly-owned subsidiaries viz., Fyve Elements LLC, USA and Sresta Global FZE, UAE.
That means Fyve Elements LLC, USA and Sresta Global FZE, UAE, have become step-down wholly-owned subsidiaries of the company with effect from June 13, the filing said.
“Upfront consideration of Rs 400 crores on a cash-free debt-free basis, subject to customary adjustments as set out in the share purchase agreements. In addition, consideration of up to Rs 72.50 crores is payable in the next 24 months,” the filing said.
ITC shared that the acquisition is in line with the strategy to augment the company’s future ready portfolio. “The transaction is expected to fortify ITC’s presence and market standing in the high growth organic products segment in both Indian and overseas markets,” it said.
“The domestic organic food products industry offers significant opportunity of growth on the back of increasing health and environmental consciousness, rise in household incomes and new age distribution channels,” ITC said.
Sresta Natural Bioproducts is primarily engaged in the business of manufacturing and selling organic food products under the ‘24 Mantra Organic’ brand. The company has a wide range of products and enjoys strong brand equity and also a well-established presence in the US markets with its own distribution set-up.
Shares of ITC closed 1.67% lower at Rs 413.95 apiece, compared to 0.68% decline in the benchmark NSE Nifty 50. It has risen 1.68% in the last 12 months and fallen 9.54% on a year-to-date basis.
Thirty seven out of the 40 analysts tracking the company have a ‘buy’ rating on the stock, two recommend a ‘hold’ and one suggests a ‘sell’, according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 20.5%.
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