ORKLA – MTR

Foods

Pratik
Chhabra
F08035
 INTRODUCTION
MTR: ORKLA :
Mavalli Tiffin Room Founded in 1904,
Norwegian Based.
Founded in 1924. Operating in the Nordic
Gained popularity. region, Eastern Europe ,
Late 1970’s US and Asia.
diversified into Main divisions:
Branded consumer goods,
ready-made mixes.
Aluminium solutions,
Invented Rava Idli. Financial investments,
Exports to the US, etc.
UK, Australia,
Singapore, Japan
and others.
 Drivers/Advantages of the Deal

For MTR Foods:



 Need for Substantial Investment in both Financial and

Human Capital to compete in the market. For eg.
against ITC.
 Market for packaged foods had shown an unanticipated
price sensitivity.
 Challenge for a small domestic player to Tap the
‘Overseas Market’ including both NRI’s and Non-
Indians keen on easy to prepare Indian curries.
 Private equity (JPMorgan Partners and Aquarius) was
eager to realise a return on its investment.
“A few years ago we started to realise that we did not have the
 MTR Foods
financial taking
backbone to time to the
develop achieve
companyprofits
in line an
withIPO
our exit was
not feasible
ambitions at, the
. At first current
we thought juncture.
a private equity company be the
right option for us, but in the end the answer was Orkla,” explains
Maiya.
 For ORKLA:
 Control of MTR Foods- Indian brand which stands
for quality, hygiene and authenticity.
 Will represent Orkla's first entry into Asia for its
branded consumer goods business.
 MTR's distribution network in India could help Orkla
to market its own products
 MTR’s manufacturing facilities could help lower
costs by outsourcing manufacturing to India.
 Overseas potential for MTR’s range.
 Access to MTR Foods 270 varieties of processed
vegetarian food products, such as ready meals,
ready mixes, spices and condiments.
 ORKLA-MTR Foods DEAL
 Advisor to the deal : NM Rothschild
 In the Race: Tata’s, Britannia, ITC, Godrej, and private
equity firms like ICICI Venture, Indivision, Actis and also
US-based spice company McCormick and ORKLA.
 Result: ORKLA the highest bidder, acquired MTR for
$100 million (Rs 443 crores) in an OUTRIGHT
Acquisition.
 Reason: ORKLA’s willingness to have a licensing
arrangement for MTR brand.
 Valuation:
 MTR foods expected to register a turnover of Rs1.65
billion ($37.6 million) for fiscal 2006-07.
 This implies a forward price-to-turnover multiple of 2.7
based on the price of $100 million.
 The price had to incorporate the substantial future
potential in the packaged foods.

 MTR Foods Stake Sale
Break-up of MTR ownership:
40% stake: Sadananda Maiya.
19% stake: Close relatives and friends.
Strategic Investors:

26% stake JP Morgan.

15% stake Aquarius.
ORKLA bought 100% stake in MTR Foods.

Management continued to be the same as ORKLA

was unfamiliar with the Indian market as well as

all the employees were retained.
THANK YOU