Shares of Patanjali Foods were gaining on Tuesday after the firm said it would acquire its parent firm’s non-food business to boost its fast-moving consumer goods (FMCG).

What Happened: Patanjali Foods said on Monday its board had approved the acquisition of Patanjali Ayurved’s non-food business in tranches for ₹1,100 crore. The move, executed on a slump sale basis, aims to broaden Patanjali Foods’ product portfolio.

Patanjali Ayurved, co-founded by Baba Ramdev and Balakrishna, currently operates in dental care, skin care, home care and hair care.

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“This acquisition of the Home and Personal Care (HPC) business will enhance our FMCG product range with marquee brands, driving significant growth in revenue and EBITDA,” Patanjali Foods stated.

Moreover, a licensing agreement for a 3% turnover-based fee has been established between the companies.

The acquisition will consolidate Patanjali’s FMCG product portfolio, bringing key synergies in brand equity, product innovation, cost optimisation, infrastructure, operational efficiency and market share growth.

Following the board’s approval, Patanjali Foods will proceed with executing definitive agreements and obtaining necessary approvals for the transaction.

Patanjali Ayurved has been embroiled in controversy over its alleged misleading ads. Ramdev had to extend an unconditional apology to the Supreme Court for failing to adhere to its directives concerning misleading advertisements. The company faced the apex court's ire after they were served notices for potential contempt proceedings.

Price Action: Patanjali Foods’ share price was trading 0.74% higher at ₹1,711.85, easing off of an all-time high at open.

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