Adani Wilmar to Acquire GD Foods in ₹603 Crore Deal, Expanding FMCG Portfolio

Adani Wilmar (AWL), a leading FMCG company in India, has announced the acquisition of G D Foods Manufacturing (India) (GD Foods) to enhance its value-added food product range.

The deal will be executed in multiple tranches, with AWL acquiring 80% of GD Foods’ shares initially at an enterprise value of ₹603 crore.

The remaining 20% will be acquired over the next three years. The share price for subsequent tranches will be determined based on a pre-determined method outlined in the share purchase agreement.

In the fiscal year 2023-24 (FY24), GD Foods reported revenue of ₹386 crore, achieving a three-year CAGR of 15% and an EBITDA of ₹32 crore. EBITDA refers to earnings before interest, taxes, depreciation, and amortization.

Funding and Transaction Timeline

The acquisition is subject to customary closing conditions, with the first tranche expected to be completed within 60 days. The deal will be financed using internal accruals or proceeds from Adani Wilmar’s IPO.

Strength of the ‘Tops’ Brand

According to Adani Wilmar, “GD Foods-owned brand ‘Tops’ has built a strong reputation as a household brand in North India over the last 40 years, offering high-quality products in categories spanning tomato ketchup, snack sauce, specialty sauces, jams, pickles, noodles, instant mixes, and cooking essentials such as vinegar, baking powder, cake mix, and corn flour.”

AWL stated that the “Tops” brand is among the top three players in the tomato ketchup and pickles categories.

The company plans to further invest in the brand and expand its distribution reach significantly. This acquisition will add margin-accretive products to AWL’s portfolio.

Market Presence and Manufacturing Capabilities

GD Foods, headquartered in Delhi, has a strong retail presence in seven North Indian states, covering over 150,000 outlets.

The company also operates in-house manufacturing facilities at three locations, ensuring consistent product quality and supply.

Strategic Vision for Adani Wilmar

Angshu Mallick, Managing Director and CEO of Adani Wilmar, emphasized the strategic importance of the acquisition, stating: “As the market evolves, there is a clear need for trusted national food FMCG brands to deliver high-quality, affordable products that fulfill the essential needs of Indian kitchens.

Delivering on this requires best-in-class manufacturing operations and a broad distribution reach, both of which are key strengths of AWL.”

Mallick further added, “The acquisition of GD Foods aligns with our vision and will significantly enlarge AWL’s offerings to meet the evolving needs of Indian households.

With eight new product categories added to our portfolio, we are laying a strong foundation to build a formidable presence in the value-added products market over time.”

Financial and Legal Advisors Involved

For Adani Wilmar, KPMG India Corporate Finance served as the financial advisor, PricewaterhouseCoopers Services as the due diligence advisor, and Cyril Amarchand Mangaldas as legal counsel.

On the GD Foods side, Equirus Capital acted as the financial advisor, with J Sagar Associates serving as legal counsel.

GD Foods’ Perspective on the Acquisition

Nitin Seth, Vice Chairman of GD Foods, expressed optimism about the acquisition, saying: “We are delighted to see ‘Tops’ become a part of AWL. For the past 40 years, we have remained committed to understanding and meeting the needs of Indian households through innovative products.

Now, with AWL’s strength behind us, ‘Tops’ products will reach a much larger number of homes. We are confident that AWL will continue to delight customers and unlock the true potential of the brand.”

Impact on Adani Wilmar’s Market Position

This acquisition aligns with Adani Wilmar’s broader strategy of expanding its food and packaged goods business.

According to a Mint report from September, the Adani Group had set aside a $1 billion fund for acquisitions in the sector. The deal will significantly enhance AWL’s product portfolio, adding multiple high-margin food categories.

Adani Wilmar is a joint venture between India’s Adani Group and Singapore’s Wilmar Group.

The company is a market leader in kitchen essentials, selling edible oil, wheat flour, rice, pulses, besan, and sugar under the Fortune and Kohinoor brands.

With this acquisition, AWL aims to further strengthen its position in the packaged foods segment, competing with industry giants like Marico Ltd, ITC Ltd, and Tata Consumer Products Ltd.

Stock Market Reaction

Following the acquisition announcement, shares of Adani Wilmar ended 1.13% lower at ₹239.80 on Tuesday, with a market capitalization of ₹31,166.29 crore.

Over the past year, the stock has declined by 36.10% and has dropped 42.67% over the last two years.

The stock is currently trading below its 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day moving averages, indicating weak technical performance.

Approximately 0.80 lakh shares changed hands, resulting in a turnover of ₹1.93 crore on the BSE. The stock has a one-year beta of 1.1r, suggesting high volatility.