Patanjali Foods to buy group company's non-food business for Rs 1,100 crore

NEW DELHI: Listed FMCG company Patanjali Foods will acquire group firm Patanjali Ayurved's home and personal care business for Rs 1,100 crore, which will lead to consolidation of the Patanjali brand under its overall FMCG portfolio, the Baba Ramdev-led company said in a stock exchange filing Monday.

"The transfer has been mutually negotiated for a lump sum consideration of Rs 1,100 crore, which shall be subject to customary closing date adjustments and on such other terms as set out in the business transfer agreement," Patanjali Foods said in the filing.

Patanjali Foods and Patanjali Ayurved have also agreed to enter into a licensing agreement, permitting Patanjali Foods to use the trademarks and associated intellectual property rights owned by the latter, the company said. Analysts said the acquisition would accelerate the company's objective of transitioning to an overall FMCG company.

Patanjali Ayurved owned 32.4% stake in Patanjali Foods as of March 31, 2024.

The home and personal care business of Patanjali Ayurved currently operates in 4 key segments-dental care, skin care, home care and hair care.

"The financial transaction is subject to customary closing date adjustments and on such other terms as set out in the business transfer agreement," Patanjali Foods said in the filing.

In addition, a 20-year licensing arrangement for a 3% turnover-based fee along with other conditions has been agreed between the two entities, according to the company.

Patanjali Foods' portfolio includes edible oils under the acquired Ruchi Soya franchise, biscuits, cookies, breakfast cereals and noodles. The non-foods business includes toothpaste, shampoo and soaps.

"The acquisition will bring along with it multiple key synergies in terms of brand equity and enhancements, product innovations, cost optimisation, infrastructure and operational efficiencies and positive impact on market share," Patanjali Foods said.

The announcement was made post-market hours on Monday. Earlier in the day, Patanjali Foods shares surged 6.81% to settle at Rs 1,699.65, amid street buzz about an upcoming reorganisation.