On September 30, 2024, Authum Investment & Infrastructure Ltd. saw a significant surge in its stock price, hitting the 5% upper circuit on the Bombay Stock Exchange (BSE). This increase was spurred by the company's board approving a 42.31% stake acquisition in Prataap Snacks Ltd.
The move is part of Authum's broader strategy to diversify its portfolio and presents a notable opportunity for those looking to invest in stocks in the FMCG sector.
Authum Investment's 5% upper circuit rise
During Monday's intraday trading session, Authum Investment's share price hit the 5% upper circuit, closing at ₹1,765 per share. The rally in Authum's stock price was driven by the board's approval of a significant stake acquisition in Prataap Snacks, a major player in the Indian packaged food industry. This development highlights a key opportunity for investors aiming to invest in stocks that are part of high-growth industries like FMCG.
By 10:12 AM on September 30, 2024, Authum Investment's shares had risen by 3.94%, reflecting the positive market sentiment surrounding the acquisition. Meanwhile, Prataap Snacks' stock was down 3.65%, trading at ₹1,007.85 per share. The BSE Sensex, in comparison, was down 0.69%, trading at 84,977.76 points. Over the past year, Authum Investment's stock has gained 251.8%, outperforming the BSE Sensex's 30% rise during the same period.
Details of the stake acquisition in Prataap Snacks
Authum Investment's board approved a 42.31% acquisition of Prataap Snacks Ltd., a transaction that positions Authum strategically in the FMCG sector. The total outlay for the acquisition is estimated at ₹846.6 crore, with Authum acquiring 10.2 million shares at ₹746 per share. Additionally, an open offer for another 6.3 million shares at ₹864 per share has been announced, which could lead to a further outgo of up to ₹544 crore.
This acquisition is a significant step for Authum as it seeks to enhance its investment portfolio by focusing on sectors that offer both growth and stability. Investors who want to invest in stocks should note that the FMCG sector, particularly in the snacks segment, has seen rapid growth, making this acquisition a timely and strategic move by Authum Investment.
The terms of the deal and market response
The stake acquisition by Authum will involve purchasing shares from existing stakeholders, including Peak XV Partners Growth Investment Holdings I, Peak XV Partners Growth Investment II, and Sequoia Capital GFIV Mauritius Investments. These are key shareholders in Prataap Snacks who are selling their stakes as part of the deal.
Authum Investment will also acquire shares from Mahi Madhusudan Kela, as per the Share Purchase Agreement (SPA) signed on September 26, 2024. According to the SPA, Authum will acquire 46.85% of Prataap Snacks in a transaction worth ₹846 crore. This includes purchasing 10.2 million shares from the Dangi family-led Authum at ₹746 per share and an additional 1.1 million shares from Mahi Madhusudan Kela. The transaction is expected to be completed within the next six months.
Conclusion
Authum Investment & Infrastructure Ltd.'s decision to acquire a 42.31% stake in Prataap Snacks reflects its strategic intent to expand into the FMCG sector, which has strong growth prospects. The stock's rise to the 5% upper circuit on the BSE further highlights investor confidence in the company's growth trajectory. For those looking to invest in stocks, particularly in sectors like FMCG that offer both growth and stability, Authum Investment's recent moves present an opportunity worth considering.
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