HUL sells Annapurna and Captain Cook brands to exit non-core Atta and salt business | Food Business Africa Magazine
INDIA – Hindustan Unilever Limited (HUL), an Indian consumer goods company, is exiting from the non-core Atta and salt business with the divestment of its Annapurna and Captain Cook brands to Singapore-based Uma Global Foods for Rs 60.4 crore (US$7.3m).
The deal, which stands at nearly 50% discount to the 2021-22 turnover of Rs 127 crore (US$15.4m) clocked by the two brands, includes the transfer of trademarks, copyrights, and other intellectual properties associated with India and several other geographies.
In the agreement, HUL will continue to manage the business until the completion of the transaction, expected to be in three months.
“HUL’s decision to divest is in line with the stated intent of exiting non-core categories while continuing to drive its growth agenda in the packaged foods’ business of dressings, scratch cooking, and soups,” said HUL.
“The brands are being sold to Uma Global Foods Pte Ltd, and Uma Consumer Products Private Ltd., subsidiaries of Reactivate Brands International, a Singapore-headquartered company and an affiliate of CSAW Aqbator Pte Ltd (Singapore).”
Reactivate Brands International is co-founded by former Unilever International CEO Umesh Shah. CSAW is focused on acquiring and scaling up food brands to promote affordable wellness.
Captain Cook came into HUL’s fold in 2000, following the acquisition of Bestfoods by Unilever. At one point, the brand was engaged in major salt wars with the leading players.
Sanjiv Mehta, CEO & MD, HUL, commented that given HUL’s strategic priorities and portfolio choices, it believes it’s in the best interest to sell these brands to Reactivate Brands International, which is well-positioned to unlock its full potential.
According to analysts in the Indian market, as much as the valuation appears to be low, the brands were not given much focus under HUL in recent years.
Being small compared to ITC in the Atta space and Tata Consumer in the salt space, Annapurna and Captain Cook can now be expected to be dusted off the shelves and given a makeover.
A spokesperson of HUL said the valuation of the divested business is in line with the comparable EBITDA (earnings before interest, taxes, depreciation, and amortization) multiple of the category.
There are several factors, such as the nature of the category, category growth momentum, margin profile, strategic importance, value creation opportunity, etc., that determine the valuation of the business., the spokesperson explained, adding that this was a low-margin business–over the last few years, operating margin was 2-3% EBITDA.
Almost seven years ago, HUL had also exited Modern Foods, a bakery business that was witnessing a phase of low growth.
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