Conagra Brands has announced the sale of its controlling stake in India’s Agro Tech Foods (ATFL).
The US food group has offloaded its 51.8% shareholding to local investment businesses Convergent Finance and Samara Capital.
In a short stock exchange announcement confirming the move, the Chicago-headquartered branded food business said the transaction is expected to be completed by the end of calendar year 2024.
Conagra, owner of US brands including Duncan Hines and Reddi-wip, did not reveal the financial details of the transaction.
However, according to a stock-exchange filing issued in India by ATFL, the investors will pay a combined $78m for Conagra’s shareholding and $44m for another 26% stake held by public investors.
Publicly-listed ATFL has a portfolio of brands including Sundrop edible oils.
Commenting on the deal, Harsha Raghavan, managing partner at Convergent Finance, said: “Agro Tech Foods’ category-defining brands have been beloved household names for the past three decades, thanks to the company’s relentless focus on quality, innovation, and customer delight.
“As India’s rapidly-growing consumer class expands and discretionary income levels continue to rise, we will expand ATFL’s distribution reach and product range, thereby transforming it into the country’s leading packaged and snack food platform.”
Conagra has “enjoyed a strong partnership” with ATFL since 1997 and became its majority shareholder in 2011. ATFL will continue to license the ACT II brand from Conagra for use in India after the deal.
Manish Mehta, managing director and co-chief investment officer at Samara Capital, added: “We are delighted to lead the acquisition of a majority stake in ATFL. The company’s brands have high recall value with India's consumers and we aim to complement this hard-earned recognition with our knowledge of India’s food and consumer sectors to increase ATFL’s presence in fast-growing, high-margin categories. We intend to create a large and unique branded food platform in the country with this acquisition.”
In January, Conagra Brands cut sales and profit guidance for the year after posting disappointing second-quarter results.
It expects its annual net sales to fall 1-2% on an organic basis, compared to its previous forecast of 1% growth. Conagra said it expected its volumes to recover more slowly due to lower consumer demand.
During a post-results call with analysts, president and CEO Sean Connolly
said: “The goal at this juncture is to build momentum, move the volumes back toward growth as we approach fiscal 2025, and make sure that we deliver along the way without signing up for anything heroic.”
The company’s net sales in the three months to the end of November were down 3.2% year-on-year at $3.20bn while net income was down 25.1% at $286.2m.
