Marico has entered into a definitive agreement with PVR INOX to buy its 93.27 per cent stake in Zea Maize Private Limited (ZMPL), which owns the gourmet popcorn brand 4700BC, in an all-cash transaction worth ₹226.8 crore.
The deal is expected to be completed within a month, Marico said in its stock exchange filing.
The fast-moving consumer goods (FMCG) major also said in the exchange filing, “The company has the right to acquire the remaining stake in Zea Maize after completion of 3 years from execution date at a consideration to be determined at such time, subject to achievement of certain milestones, requisite approvals and terms and conditions under the definitive agreements.”
PVR INOX invested in the brand more than a decade ago and 4700BC has entered its next phase of growth. It needs a sharper FMCG focus, deeper distribution reach and accelerated new product launches, the movie exhibitor said in its release.
“Over the years, the brand has built a strong multichannel presence spanning modern retail, digital commerce and institutional commerce. This business has successfully grown outside cinemas and become an FMCG brand,” Gaurav Sharma, chief financial officer (CFO), PVR INOX, told Business Standard.
He added that the brand has reached a scale where the next phase of growth requires deeper FMCG capabilities like a wide distribution network and product expansion capabilities.
“At PVR INOX, we feel we have played our role in nurturing the brand and at this stage the brand is better supported by a large FMCG platform like Marico,” Sharma said.
He also said that the transaction represents a timely monetisation for the company of a non-core asset and the opportunity to unlock shareholder value.
PVR INOX will use the proceeds of the sale to reduce debt and invest in its core business of cinema exhibition, Sharma said.
“The investment in 4700BC aligns well with Marico’s ambition to participate in fast-growing food categories through distinctive, future-ready brands. We see immense potential in 4700BC as a premium snacking brand with deep consumer connect and proven execution. Together, we will tap the opportunity to leverage our existing scale in foods to broaden the brand’s presence across channels, while staying true to its consumer-first ethos and harnessing its top-notch innovation capabilities,” said Saugata Gupta, managing director (MD) and chief executive officer (CEO) at Marico, in its release.
Axis Capital acted as the exclusive financial advisor and Shardul Amarchand Mangaldas & Co was the legal advisor to PVR INOX for this transaction.
Ajay Bijli, MD, PVR INOX, said, “We recognised the potential in 4700BC at a very early stage and supported the brand through its formative years. From a niche gourmet popcorn offering, it has grown into a nationally-recognised premium snacking brand. As it looks to scale further and broaden its ambition, the brand is well positioned under the stewardship of a scaled FMCG leader like Marico. For PVR INOX, this transaction represents a natural culmination of our strategic role and enables us to monetise a non-core asset.”
