Vadilal in advanced talks to sell stake to PAG, Arpwood
MUMBAI : The feuding promoters of Vadilal Industries Ltd are in advanced talks to sell their entire stake in the ice cream maker and its domestic distribution business to a combine of Arpwood Partners and PAG, two people aware of the development said.
“It will be an all-cash deal that would involve Vadilal’s promoters exiting both their companies completely. The transaction is likely to value the business at around ₹1,000 crore,” one of the two people said, requesting anonymity. Investment bank Lincoln International is advising Vadilal on the transaction, the person added. Rajesh Gandhi, Virendra Gandhi and Devanshu Gandhi, along with other family members, form the promoter group.
The rift in the family began in 2015, when Virendra Gandhi accused brother Rajesh and cousin Devanshu of mismanagement and financial misappropriation. The legal battle continued for four years, following which the two Vadilal companies told exchanges on August 24 last year that its promoter-directors have withdrawn all allegations against each other, except two related to “inappropriate” payments and personal expenses being classified as official. The purchase of a controlling stake in Vadilal will give the Arpwood Partners-pag combine a 7% market share in the Indian ice cream and frozen food market, estimated to be more than ₹11,000 crore in size, according to an April report by India Ratings. Vadilal is present across north India and is most popular in Gujarat.
“The talks between Arpwood Partners and Vadilal group promoters were on for a long time, but the transaction got delayed due to pending litigation between the two brothers,” the second person said, also requesting anonymity. PAG manages $30 billion in assets across various classes, while Arpwood is an advisory and investment firm founded by investment banker Rajeev Gupta.
The person added that the promoters are looking to exit due to the family feud as well as succession-related issues.
As of December 31, the promoter and promoter group entities together controlled a 64.73% stake in Vadilal Industries and 51.26% in Vadilal Enterprises, the distribution arm.
While emails sent to Lincoln International, Arpwood Partners and Devanshu Gandhi remained unanswered till press time, PAG declined to comment on the matter. Calls, emails and text messages sent to Vadilal director Rajesh Gandhi did not elicit a response.
Having started with a small retail outlet in 1926, Vadilal Group today operates through the two listed firms, Vadilal Industries and Vadilal Enterprises. While Vadilal Industries makes ice cream and frozen food through its two manufacturing plants at Pundhra, Gujarat and Bareilly, Vadilal Enterprises sells ice cream in the domestic market and takes all marketing decisions such as pricing of stockkeeping units for Vadilal Industries.