ITC, a diversified conglomerate, announced that it would acquire 100% of Sproutlife Foods Private Limited, the maker of Yoga Bar healthy foods.

The company has signed a binding term sheet to acquire 100% of Sproutlife's share capital (on a fully diluted basis) in tranches over a three to four-year period.

According to an exchange filing, ITC acquired 47.5 percent on a fully diluted basis through primary subscription and secondary purchases. An initial investment of Rs 175 crore would be made for the acquisition of 39.4%, which is expected to be completed by February 15, 2023, or a mutually agreed-upon later date.

A further Rs 80 crore would be invested through primary subscription in one or more tranches by March 31, 2025 or later.

The purchase of the remaining shares, bringing the total shareholding to 100%, would be determined based on pre-agreed valuation criteria and subject to the fulfilment of various terms and conditions.

The acquisition of Yoga Bar, which has a strong online presence, follows ITC's recent investments in D2C brands, Mylo and Mother Sparsh.

ITC stated that the Yoga Bar acquisition would strengthen its position in the Rs 45,000 crore fast-growing, nutrition-led healthy foods space. Its product portfolio comprises nutrition bars, muesli, oats and cereals.

Yoga Bar is positioned as a digital first brand, with a strong emphasis on online sales (D2C, e-commerce platforms) and a growing presence in physical stores. According to an ITC statement, Yoga Bar has established itself as a market leader in the bars segment while also holding a strong market position in the muesli segment.

The acquisition would also allow ITC to expand its portfolio in the "good for you" category, which currently includes Aashirvaad multigrain atta, Aashirvaad Nature's Super Foods, Farmlite biscuits, Sunfeast protein shake, and B Natural Nutrilite ABC Beverage, among others. It is also expected to be rapidly scaled up, leveraging ITC strengths in sales and distribution, sourcing, product development, and digital.

Hemant Malik, Divisional Chief Executive, Foods Division, ITC Limited, commented on the acquisition, saying, "We believe that this investment is an exciting opportunity that aligns with ITC's Foods Business' aspiration to build a formidable portfolio in the nutrition-led healthy foods space."

"We are excited to grow the Yoga Bar brand by providing superior and healthy consumer options."

ITC has a long history of building world-class brands, leveraging its core competencies, which include superior understanding of the consumer, strong backward linkages with agri supply chain, and a deep and wide distribution network, according to co-founders Suhasini Sampath Kumar and Anindita Sampath Kumar.

“We are confident that this partnership will add to Yoga Bar’s competitive advantage and take it to the next level from the current Annualised Run Rate of over Rs 100 crore. We are delighted that ITC and Yoga Bar will work together to build one of the largest brands in the healthy foods space.”

Post-pandemic The D2C space is becoming increasingly popular. In December, Hindustan Unilever announced its entry into the Indian health and wellness market by acquiring a majority stake in Zywie Ventures, which sells plant-based and clean-label consumer wellness brands under the brand name Oziva, for Rs 264.28 crores.

It will also acquire its subsidiary Zenherb Labs indirectly. It informed the exchange on January 11 that it had completed the acquisition of 51% of Zywie.

In another transaction, Horlicks' new owner announced in December that it would pay Rs 70 crore for a 19.8 percent stake in Nutritionalab, which houses its products under the brand name Wellbeing Nutrition.