Prataap Snacks jumps 10% as Authum Investment and Mahi Kela acquire 47% stake

Prataap Snacks witnessed a significant surge in its share price, advancing nearly 10% on Friday to reach an intraday high of ₹1,156.55 on the Bombay Stock Exchange (BSE). Despite the impressive start, the stock later adjusted its gains, trading at ₹1,056.20, reflecting a modest increase of 0.23% by 10:19 AM. 

In comparison, the BSE Sensex was up 0.12% at 85,940.24 during the same period. The jump in Prataap Snacks' shares follows the announcement of a share purchase agreement with Authum Investment and Mahi Madhusudan Kela, aimed at acquiring controlling stakes in the company.

Details of the acquisition

According to the agreement, Authum Investment plans to acquire 102.48 million shares of Prataap Snacks, which accounts for 42.31% of the total equity. Meanwhile, Mahi Madhusudan Kela will acquire 1 million shares, representing 4.54% of the voting share capital. The purchase will be executed at ₹746 per share. This share purchase agreement comes after Authum Investment and Mahi Kela launched an open offer to acquire up to 62,98,351 shares, equating to 26% of the voting share capital.

In their official filing, the companies stated, "Authum Investment & Infrastructure Limited (Acquirer) and Mahi Madhusudan Kela, acting in concert with the Acquirer (PAC), have announced an open offer for the acquisition of up to 62,98,351 fully paid-up equity shares of face value ₹5 each from the public shareholders of Prataap Snacks, representing 26% of the voting share capital."

The acquisition proposal was made at ₹864 per share, aggregating a total of up to ₹544.17 crore (assuming full acceptance) in cash. This strategic move will undoubtedly have implications for those looking to invest in stocks in the snack food sector.

Stakeholder changes and future intentions

As part of this transaction, Peak XV Partners Growth Investment Holdings, Peak XV Partners Growth Investments II, and Sequoia Capital GFIV Mauritius Investments are set to divest their stakes in Prataap Snacks. Following the acquisition, Authum Investment will assume the role of promoter for Prataap Snacks, with Mahi Kela and other PACs potentially joining the promoter group, depending on applicable laws.

Importantly, the acquiring stakeholders have expressed no intention of delisting Prataap Snacks from the stock exchange post-acquisition. This assurance may encourage investors looking to invest in stocks, confident in the continuity of the company's public trading status.

Overview of Prataap Snacks

Prataap Snacks is a prominent Indian snack food manufacturer, specialising in a variety of products, including potato chips, extruded snacks, and traditional snacks known as 'Namkeen'. The company offers a diverse range of products under its 'Yellow Diamond' and 'Rich Feast' brands, featuring items such as 'Foodchka', 'Mini Muska Bun', 'Masala Pipe', 'Stix', 'Cookie Cake', 'Centre-filled cupcake', 'Katori', and 'Tiffin Cake'.

In January 2024, there were reports suggesting that Haldiram's, another major player in the snacks industry, was in discussions to acquire a majority stake in Prataap Snacks. However, the recent developments with Authum Investment and Mahi Kela indicate a significant shift in ownership dynamics.

Conclusion

The surge in Prataap Snacks' share price highlights the growing interest in the company, particularly following the acquisition news. Investors keen to invest in stocks should keep a close eye on Prataap Snacks as it navigates this new chapter under the stewardship of Authum Investment and Mahi Kela. With promising prospects ahead, the company's performance may further attract attention from those looking to diversify their portfolios in the snack food industry.