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Zydus Cadila’s acquisition of Kraft Heinz to unlock synergies in distribution & portfolio

“In our view, this is a win-win deal for both Zydus and Heinz; Heinz will now likely focus on its global portfolio, ketchup and mayonnaise,” Edelweiss Securities senior VP Abneesh Roy said.

, ET Bureau|
Last Updated: Oct 24, 2018, 02.07 PM IST
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Zydus-Cadila
Zydus Wellness said the acquisition will result in its own annual turnover increasing to around Rs 1,700 crore and that it will be earnings per share (EPS) accretive.
Zydus Wellness and Cadila Healthcare’s acquisition of the consumer brand business of Kraft Heinz India for Rs 4,595 crore will help leverage synergies in distribution, innovation and portfolio, analysts said.

“In our view, this is a win-win deal for both Zydus and Heinz; Heinz will now likely focus on its global portfolio, ketchup and mayonnaise,” Edelweiss Securities senior VP Abneesh Roy said in a report soon after the deal was announced Wednesday.

Heinz India, a subsidiary of US foods maker Kraft Heinz, has a portfolio of brands that includes malt drink Complan, glucose powder drink Glucon D, Nycil talc and Sampriti ghee.

Analysts said the deal will unlock synergies for both -- Zydus Wellness is strong in chemist channels, while Heinz brands have been well-entrenched in grocery stores.

“We see synergy in the portfolio with Complan adding to the health portfolio of Zydus’ Sugarfree, Nutralite and Actilife brands, while Nycil talcum powder is adjacent to Zydus’s Everyuth skin-care franchise,” Roy said.

Zydus Wellness said the acquisition will result in its own annual turnover increasing to around Rs 1,700 crore and that it will be earnings per share (EPS) accretive.

“The acquisition will create enhanced infrastructure and distribution reach which will have a combined strength of five manufacturing facilities, 1,800 distributors and nearly 2 million customer touchpoints,” Roy said.

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