ITC is said to be considering the acquisition of a 47% stake in Prataap Snacks, currently owned by Peak XV Partners.

What Happened: As per the Economic Times, this step comes after ITC‘s unsuccessful negotiations with Haldiram’s due to a valuation mismatch. Prataap Snacks, popular for its Yellow Diamond chips and Avadh brand namkeen, had previously been in discussions with Bikaji Foods, but those talks also didn’t materialize.

Buyout funds such as KKR, TA Associates, and Apax have been approached since Peak XV decided to completely exit its almost 13-year-old investment in Prataap. Deutsche Bank has been engaged to facilitate the sale.

If the transaction goes through, it will trigger an open offer for an additional 26% of the Indore-based company, which has been struggling since its stock market debut in 2017. ITC, famous for its Bingo chips and namkeen, views this acquisition as a potential opportunity to expand its footprint in regional markets.

Why It Matters: ITC’s interest in Prataap Snacks comes at a time when the company’s performance has been a mixed bag. In January 2024, ITC reported an 11% growth in standalone net profit for the December quarter, surpassing street estimates. However, the company’s revenue missed analysts’ estimates, leading to volatility in shares.

In February 2024, ITC’s shares recovered as uncertainty over the sale of its largest shareholder British American Tobacco (BAT) eased. However, a potential stake sale could create a supply overhang, indicating a tough road ahead for the company.

Price Action: ITC’s share price was up 0.41% to trade at ₹405 as the markets opened on Thursday.

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