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Diversified conglomerate ITC has announced the acquisition of Sproutlife Foods Pvt Ltd, which owns the direct-to-consumer (D2C) brand Yoga Bar.

ITC has signed a binding term sheet to acquire 100% shares of Sproutlife Foods over a period of three to four years, said a statement.

The company said its proposed investment in Sproutlife Foods would fortify its presence in the “Rs 45,000-crore, fast-growing, nutrition-led healthy foods space”.

The company will initially acquire a 47.5% stake in Sproutlife Foods, in tranches, by March 31, 2025, and the remaining stake will be acquired, on the basis of pre-defined valuation criteria, subject to other conditions in the binding documents, it said.

An initial investment of Rs 175 crore will be made through primary subscription and secondary purchases for the acquisition of 39.4% of the paid-up share capital , which is expected to be completed by February 15, 2023, ITC said in a regulatory filing. Further, a cash infusion of Rs 80 crore will be made through primary subscription, in one or more tranches, by March 31, 2025.

The purchase of the balance 52.5% shares, which would take the shareholding to 100%, would be determined based on pre-agreed valuation criteria, subject to fulfilment of various terms and conditions, ITC said in the filing.

Sproutlife Foods manufactures and sells products targeted at ‘health-conscious’ consumers under the new-age digital-first brand ‘Yoga Bar’. In FY22, it clocked a turnover of Rs 68 crore.

This acquisition, ITC said, is “in line with the strategy to augment the company’s future-ready portfolio, the proposed acquisition will strengthen and expand its reach with innovative food products for health-conscious consumers”.

“Yoga Bar is expected to be rapidly scaled up, leveraging ITC’s enterprise strengths in areas such as sales and distribution, sourcing, product development, and digital,” said ITC.

“Within a short span of time, Yoga Bar has established itself as a leading brand in the healthy foods space, driven by impactful market positioning and a range of innovative products,” said Hemant Malik, Divisional Chief Executive, Foods Division, ITC.

“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,” said Suhasini Sampath Kumar and Anindita Sampath Kumar, Co-founders of Yoga Bar.

Aashirvaad’s Multi-Grain Atta, Aashirvaad Nature’s Super Foods, Farmlite’s range of biscuits, Sunfeast’s Protein Shake, and B Natural’s Nutrilite ABC beverage are some of the competing brands/products in this space.

Health and wellness segment

Health and wellness is a fast-evolving category in the country with several FMCG companies entering the space.

Last week, Hindustan Unilever Ltd (HUL) announced the completion of its acquisition of a 51% stake in Zywie Ventures, a wellness company which owns the OZiva brand, for a consideration of Rs 264.28 crore.

HUL has also acquired a 19.8% stake in Nutritionalab Pvt Ltd (Wellbeing Nutrition) for a cash consideration of Rs 70 crore.