Mars to buy majority stake in Tasty Bite
Bhavesh, thanks for the link, which clarifies most doubts. Also at BSE open offer is made for Rs.5323.87, which will act as the base for the share price henceforth. http://www.bseindia.com/corporates/anndet_new.aspx?newsid=86f60aab-30b6-4e33-bbf7-587e942cc2e8
However the Open offer document doesn’t give the final promoter shareholding structure. So, still a enigma, whether the original promoters Ashok vasudevan etc have sold out or not. Looks like the japanese have sold out for now. Mars, being present in US in a major way even in ready to eat food, is a good boost to management and distribution for Tasty bites. Hopefully we can see better performance and dividend policy from the promoters now.
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Agree on the promoters details is not known.
I think this is going to be hugely beneficial for Tasty Bites for two key reasons :
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As you rightly mentioned Mars as significant presence in US. This will open up their marketing network for Tasty Bites.
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Mars has decent number of products that are rise and wheat based. I do not rule out a possibility of they leveraing Tasty Bites manufacturing base in India to develop these products.
I think there is a possibility that this take over may potentially take Tasty Bites to the next level.
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Full details of the Open Offer are available here. http://www.bseindia.com/corporates/ann.aspx?scrip=519091%20&dur=A
So Mars(through its investment arm subsidiary of Wrigleys) is acquiring 100% stake in Delaware Corporation, the Offshore Parent company(70% acquired from Kagome and 30% acquired from ASG) which inturn holds 100% in Indian parent company which inturn holds 74.22% in Tasty Bite Eatables Ltd at a price of Rs.5323.87/-
Mars becoming the 75% promote in Tasty bites is excellent for Tasty bite, since a majority of Tasty Bites Sales happens in the USA. Also according to the offer document, Mars intends to continue Tasty Bite business and strengthen its distribution further in US and worldwide. Also it intends to retain the management and employees of Tasty Bites and continue and enhance the business in future in US and worldwide.This is exciting news for the shareholders as Mars is now the only Sole Promoters. According to me Mars, is a much better promoter than Kagome as the target market is US, with their distribution and product offerings which are versatile as we all know and also Japanese/Chinese, from what I know, are not much shareholder friendly in general.
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Upon the back of the mars acquisition , decent results and tremendous run up in price. A couple of questions on the future of the company is gnawing in my mind.
1)Since the insiders are in the best position to know about the future growth potential , why would they sell out early ?(threat from regulators ?/ growth is going to be stagnant going forward?)
2)The management responsible for the turn around and the success of the company , does not have a stake in the success of the company any more. What will be their motivation going forward.
Warren buffet presumably always left some stake in the hands of the management of the businesses he took over.
3)What is mars intending to do with the comapny , this acquisition is tiny compared to Mars’s other acquisitions and miniscule compared to Mars itself, will mars spare management bandwidth to improve this business.
Can we find out mars capital allocation history and see what they have done with other acquisitions, maybe that will shed some light on the future of this co.
disc invested
You have valid point but Quality always pays and Tasty bite has created a some what visible brand. QSR is the theme. Remain invested the flow can take it to stratosphere. Management initiated an idea which was successful. I believe they are not the cooks and innovators but have encashed their success, my bet is there will be a clause of minimum work period for the founders and non compete. Mars has deeper pockets and access to the Global market. More channels and avenues will compliment.
There is one elephant in the room that i have not addressed in my previous post and it is a huge one.
The listed entity tasty bites does not own the brands, the brands where with preferred brands international which is now 100 % owned by mars.
The public now owns a stake of essentially a manufacturing setup and NOT tasty bite branded foods distributed in the us and uk.
This is from stalwart advisors post on tasty bitebefore the mars takeover:
“Corporate Governance – There has been a doubt in the minds of a lot of investors regarding the questionable corporate structure where capital heavy manufacturing is with listed entity TBE whereas asset light branding and distribution resides with parent company in the USA. We spent fair amount of time going through the history of the company, its founders and potential incentives to play around transfer pricing, to rule this out. We also met the management and interacted with some key shareholders to understand the background of this structure. It isn’t something that was intentionally designed this way, rather it just happened. The current management through PBI was handling distribution in USA for HUL before PBI bought this company (& its manufacturing facilities) and structure stayed that way ever since. Management has hinted at their willingness to simplify the structure.”
Now since they have the tasty bite brand (part of PBI and which is what mars wanted in the first place)
are they going to be concentrating on improving the listed business which is essentially a plant and a qsr business they might not be interested in.
Was trying to verify the claim of management as regards their reach i.e. presence in large malls in USA. Managed to find out that they have products listed online for purchase. Links shared …
https://www.heb.com/search/product-results?N=4294948740&Ntt=vegan&q=vegan&showMoreIds=10093
The big name here is Walmart and I understand from a friend who stays in US that if Walmart lists them it means they have done something good.
I spotted this late and am not yet invested but am tracking it.
Maybe some one more insightful can give this info some shape
@s11 The listed entity does not own the brands and distribution of tasty bite , it means mars might not be restricted to manufacture tasty bite to the pune facility(the nse bse listed entity) and hence the listed business need not grow along with the brand growth.
any of the seniors can share their thoughts @Donald @aveekmitra @Bhaumik_6870
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Well the stalwart report does cast some shadows but The result of Q2 were good , I doubt it is just QSR as it is a tough and very low margin bz Any idea what could be driving it and is it sustainable.
This is something very important to look into… Now if this is the case then what’s the point investing considering Mars Inc has bought the stake in it?
@dwarak Tasty Bites is not a contract manufacturer but owns the brand. i.e. the listed entity in India owns the brand and not the parent entity.
I had mailed them the query on ownership of their IP
And they have clarified that they do not own the tasty bite ip
Disc:invested from lower levels
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Thank you for the clarification. Was unaware of that.
transactions are carried on at arms length basis earlier (before Mars became the owner - clarified in previous AGM) and the same continues now.
Management is sounding bullish… Any reason or they are betting on Indian market QSR sales
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My 2 cents
If Mars doesnt rock the boat and continues using the listed entity manufacture the rte products and expands production then it is business as usual.But , as per my understanding mars is under no obligation to do so.
barring regulations If it is economically better to manufacture the rte products anywhere else it certainly will
But the qsr story should still be intact, and the listed entity is the one which has relationd with jubiliant , dominoes etc and not PBI ( which mars owns)
It would have been ideal if the the listed entity had a share in the IP of the rte
Management doesnt do concalls hence hard to say what are mars’s plans
Annual report should throw some light , as tbel’s are quite informative
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One of the important aspect while management assessment is to consider is “skin in the game”.
The Indian promoters cashed out completely. How long they continue supporting this company is a question…
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Just got my hands on this report by Ambit Capital for all those interested in Tasty Bites, very comprehensive 53 pages on the company and industry.
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Is it possible for you to share the document?
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