Del Monte offloads stake in India’s Sundrop Brands

Del Monte Pacific Ltd. (DMPL) has begun unloading its stake in India’s Sundrop Brands Ltd., completing an initial deal that covers 4.99-percent interest in the latter.

The food and beverage giant disclosed on Friday that the $15-million agreement between its indirect subsidiary DMPL India Ltd. and CAG-Tech (Mauritius) Ltd. was already completed.

Sealed last Dec. 16, the transaction involved the sale of 1.88 million ordinary shares.

In an earlier filing, Del Monte said Mauritius can purchase an additional 4.99-percent interest for $14.8 million.

Aside from this, Del Monte said DMPL India Holdco again inked a separate share purchase agreement with an independent third-party buyer.

This pertains to the sale of an additional 547,946 shares in Sundrop Brands. This translates to a stake of about 1.45 percent.

“The terms of this additional share purchase agreement were agreed on an arm’s-length basis and are substantially similar to those of the Tranche 1 Disposal,” Del Monte said.

“Completion of the transaction is subject to the satisfaction of similar customary conditions precedent,” it added.

Sundrop Brands is a major player in India’s food and edible oils industry. It owns popular consumer brands such as ACT II popcorn and Sundrop edible oil.

The Indian firm is listed on the National Stock Exchange and the Bombay Stock Exchange in India. It also has business in manufacturing, marketing and selling food and food ingredients.

Del Monte earlier said exiting from Sundrop Brands allows it to strengthen its finances and boost its core operations.

“The proposed Sundrop Disposal Transactions are expected to mitigate risk andprevent further capital erosion by divesting a noncore public equity holding that exhibits declining value, thereby preserving capital for immediate and value-accretive reallocation into core business segments,” the company said in a disclosure dated Dec. 17.

The group recorded a sevenfold income growth in the second quarter of its fiscal year, ending in October. This was thanks to strong demand here and abroad. Its net profit soared to $16.8 million during the period, significantly higher than $2.3 million a year ago. This brings its net income in the first half to $22.3 million from $2.7 million.