Dear Investor,

After releasing pledge yesterday, TBE reported a big corporate action today.

Kagome, a leading food company of Japan, has bought majority stake in Preferred Brands International (PBI), the ultimate holding company of Tasty Bite Eatables, giving an exit to Private Equity investors (PBI had raised private equity multiple times over the last few years)

• In an all cash deal, Kagome has agreed to pay $80mn (Rs 500 Cr.) for 70% stake in the holding company, which in turn holds 74.2% stake in Tasty Bite Eatables. So, deal has valued TBE at over 900 Cr., Even if one discounts for parent company's distribution interest, the sum is substantial considering its at least three times the enterprise value of TBE (Rs 200 Cr. at the time of announcement)
• Current Promoters will continue to hold the remaining 30% in the holding company. Further, there will be no change in the management and promoters will continue to lead the company.
• As per the filing by Kagome (link provided below), they find ample opportunities of growth and have shared some spectacular revenue projections due to synergies. Kagome is one of the oldest and largest foods company of Japan. Founded in 1899, it today boasts of annual revenues of over $2bn and is listed on Tokyo Stock Exchange.
• As per SEBI (SAST) Regulations, this has triggered an open offer. Kagome has offered Rs 655 per share to acquire ~25% holding from the minority shareholders of TBE.

This development has further increased our conviction in the business prospects and the current prices seem to offer margin of safety if we compare it with its intrinsic value (read 'private/deal' value).

For those of us who managed to get some shares today, let us hold the position. For rest of us, lets keep an eye and enter as and when it consolidates or supply increases. In the light of the above development, we are increasing suggested buy range by 15% i.e uptill ~920 levels.

Important Links:

• Press Release by Kagome
• Press Release by Tasty Bite Eatables
• Open Offer