Authum’s Strategic Acquisition: Diamond Snacks Deal Unveiled

In a significant development in the Indian snack industry, Authum Investments & Infra has entered into a share purchase agreement with Mahi Madhusudan Banana to acquire a majority stake in Prataap Snacks. The announcement was made on September 27, 2024, leading to a noticeable reaction in the stock market, where shares of both companies experienced a decline.

As per the exchange filing, Authum Investments has officially signed a share purchase agreement on September 26 to acquire a 46.84% stake in Prataap Snacks. This stake is being purchased from major investors including Peak XV Partners Growth Investment Holdings I, Peak XV Partners Growth Investments II, and Sequoia Capital GFIV Mauritius Investments. Specifically, Authum will acquire 1.13 crore shares at a rate of Rs 746 per share, amounting to a total of Rs 846.6 crore.

This transaction is set to enhance Authum’s stake in Prataap Snacks to 42.31%, transforming the snack company into an associate entity. Following this acquisition, Authum will initiate an open offer to buy an additional 62,98,351 shares from public shareholders at a price of Rs 864 per share, which represents 26% of Prataap Snacks’ voting share capital. This open offer is valued at approximately Rs 544.17 crore.

The announcement of this acquisition had immediate repercussions on the stock prices of both companies. On the day of the news, Prataap Snacks’ shares closed at Rs 1052.00, reflecting a slight decrease of 0.17%. During the trading session, the stock experienced volatility, ranging from a high of Rs 1156.55 to a low of Rs 1008.40. Similarly, shares of Authum Investments & Infra ended the day at Rs 1701.40, marking a decline of 0.15% from the previous day’s closing. Intra-day trading saw its shares fluctuate between a high of Rs 1789.20 and a low of Rs 1686.10.

Despite the ownership transition, it is confirmed that Prataap Snacks will not be delisted from the stock exchanges and will continue trading publicly. Authum’s investment strategy is grounded in the long-term goal of diversifying its portfolio and expanding its business, ultimately aiming to maximize stakeholder value.

As of June 2024, Madhusudan Kela still holds a 2.8% stake in Prataap Snacks through his fund. Prataap Snacks, a well-recognized company based in Madhya Pradesh, is famous for its Diamond brand snacks, which have captivated the taste buds of consumers across India.

This acquisition marks a pivotal moment in the competitive snack industry, as Authum Investments seeks to leverage Prataap Snacks’ established market presence to propel its growth strategy and enhance overall business prospects.