Spencer’s takes a bite out of Godrej’s food retail business

Spencer take Godrej food retail

Khaitan & Co and Trilegal worked on the 100% stake acquisition of Godrej Nature’s Basket (GNB) by Spencer’s Retail, a part of RP Sanjiv Goenka Group for ₹3 billion (US$42 million).

The fact that Godrej and Spencer’s are both leading players in the food retail sector made the deal extremely high octane and nuanced with a lot of business cross-pollination,” said Khaitan & Co partner Surbhi Kejriwal who advised RP Sanjiv Goenka Group, their long-time client.

That both the buyer and the seller are listed entities made the process more challenging and intricate.”

The promoter group holds 61% shares in GNB and the company had a turnover of 3.3 billion in the financial year 2018-19. The acquisition is subject to shareholder approvals from both companies and is expected to be completed by mid-July.

The deal comes against a backdrop of consolidation in the food retail sector. “There has been a movement in this sub-sector (i.e. food items/grocery retail trading) towards consolidation, especially by the bigger players,” said Khaitan & Co partner Ashraya Rao, who also worked on the deal.

Future Retail has acquired several chains (i.e. Bharati Retail Limited (EasyDay), Heritage Foods, etc.) in a bid to consolidate its brand and extend its footprint across the country. This sector is definitely a bit tricky to succeed in, and it is no coincidence that it is well-funded big players like Godrej, Future and RP Sanjiv Goenka Group, which have sector knowledge, that are the frontrunners.”

The Khaitan & Co partners were supported by senior associate Ayush Nanda on the deal. The firm was involved in drafting and finalizing the transaction documents, in addition to carrying out due diligence and structuring the overall transaction. Trilegal advised Godrej and the firm was represented by partner Kunal Chandra and senior associate Akshat Shrivastava.

Nature’s Basket is a convenience store targeted at upmarket customers and is present in Mumbai, Pune and Bengaluru through 36 stores. Spencer’s Retail, a part of RP Sanjiv Goenka Group, is a multi-format retailer selling a wide range of products across categories such as food and personal care, electrical and electronics products.