Baba Ramdev's company Patanjali Foods made a big announcement, will buy this business for Rs 1100 crore

Patanjali Foods on July 1 said its board has approved a proposal to buy the non-food business of its parent company Patanjali Ayurveda for Rs 1,100 crore. That is, the company will buy the home care and personal care business of Patanjali Ayurveda.

The acquisition will expand the company's product portfolio based on slump sales, the company said in a regulatory filing. Ramdev is the co-founder of Patanjali Ayurveda while Balakrishna is the managing director of the company. The company's non-food business currently deals in dental care, skin care, home care and hair care.

This strategic initiative to acquire the Home and Personal Care (HPC) business will strengthen the company's existing FMCG product portfolio with multiple key brands that will contribute to significant growth in revenue and EBITDA. Apart from this, the companies have also agreed on a licensing arrangement for a 3 percent turnover based fee and other terms.

Stock Performance

On Monday, shares of Patanjali Foods witnessed a spectacular rally. Which closed at Rs 1,710 with an increase of 7.45 percent. In the last one year, the shares of the company have seen an increase of 43.49 percent. The stock's 52-week high is Rs 1,722.

Will buy this business for 1100 crores

For transfer of HPC business between Company and PAL Rs. 1100 crores has been mutually negotiated, subject to customary closing date adjustments and other terms and conditions stipulated in the Business Transfer Agreement to be executed between the Company and PAL. A license arrangement has been entered into between the Company and PAL for a 3% turnover based fee as well as other terms.

The acquisition will strengthen the FMCG product portfolio of the 'Patanjali' brand. The acquisition will bring huge synergies in terms of brand equity and promotion, product innovations, cost optimization, infrastructure and operational efficiencies and positive impact on market share. With this acquisition, the company also stated that it has reaffirmed its position as a strong FMCG company on its journey to become a major player in the FMCG sector as it had committed to its shareholders at the time of its first FPO.

Pursuant to the approval of PFL's Board, the Company will now take necessary steps to enter into definitive agreements in connection with the acquisition and also apply for necessary approvals for the transaction.