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New Delhi: World's second-largest snack foods company Kellogg is in exclusive talks with India's leading snack maker Haldiram's for a stake purchase, the Economic Times reported citing sources close to the group and involved in the talk.

The American breakfast cereal giant looks to diversify its portfolio in India nearly 25 years after entering the country. Both Kellogg and Haldiram's are in talks under an exclusivity agreement which would lapse by the end of February, the ET report mentioned.

It may be noted that Haldiram’s operates out of three hubs of Delhi, Nagpur and Kolkata, after the Agarwal brothers split the family business geographically among themselves in the 1990s. They are all descendants of Gangabhisan ‘Bhujiawala’ Agarwal, who began his entrepreneurial journey with a sole shop in Bikaner, Rajasthan, in 1937.

The ongoing talks involve two of the three branches of the company — Delhi-based Haldiram Ethnic Foods and its affiliates, and Nagpur-based Haldiram’s Food International and affiliates that cater to the western and southern markets. These two businesses (excluding the restaurant business) are valued at around $3 billion (Rs 20,000 crore), the business daily said.

Both Haldiram's and Kellogg declined to comment on this development when contacted by ET.

According to the ET report, Michigan-based Kellogg is believed to be pressing for a 51% stake in the two divisions while the Agarwal family is not keen to cede control and prefers a 25% dilution. Several management meetings have taken place between the top officials of both sides, the report added.

The eastern faction of the family that manages Haldiram Bhujiawala from Kolkata is not part of the discussion. It is also the smallest of the three. The Delhi and Nagpur divisions, together, are expected to end FY19 with sales of Rs 4,500-5,000 crore and profit of Rs 450-550 crore.

Worth mentioning here is that there is no guarantee that a deal will fructify as Kellogg has been in negotiations intermittently with the Agarwal family for close to a year. The ET report citing multiple sources said talks seemed to have picked up pace recently. But they also said several members of the family are holding out and are keen on an initial public offering to get a better valuation.

