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Indian snacks maker Haldiram's is in talks to acquire a majority stake in listed rival Prataap Snacks, which is valued at $350 million, to expand its presence in the potato chip market, two people with direct knowledge of the matter said.

Prataap Snacks shares in Mumbai jumped about 13% to their highest levels since 2018 after the news, before paring some gains to close 9.7% higher.

The talks are at an early stage and a valuation has not been discussed, though it could be at a premium to Prataap's stock price. Haldiram's is considering a majority stake of at least 51%, but a final number has not been decided, said the sources, who declined to be named as the discussions are confidential.

Prataap is best known for its Yellow Diamond brand of chips and competes with Pepsi's Lay's brand and other snack-makers in a market where local, unorganised food sellers still dominate the fried chips segment.

Venture capital firm Peak XV Partners, formerly known as Sequoia Capital India, owns around 47% of Prataap Snacks and is looking to fully exit its stake in Prataap, the sources added.

Haldiram's CEO Krishan Kumar Chutani, Prataap CEO Amit Kumat, and Peak XV all declined to comment.

Prataap made its stock market debut in 2017 and had annual revenues of around $200 million last year. It says it sells over 12 million packets of its salty snacks daily, which are priced as low as 5 rupees (6 U.S. cents).

However, unlisted Haldiram's, a family-run business founded in 1937, is a much larger manufacturer of packaged snacks with revenue of over $1 billion and runs 150 restaurants across the country. Last year, Reuters reported the company was seeking a $10 billion valuation in deal talks with conglomerate Tata Group and other strategic investors it wanted to bring on board, but the talks didn't materialize over valuation concerns.

"A deal (with Prataap) will help Haldiram's tap the potato chips segment. Consumers often prefer western flavoured snacks over local ones," said one of the sources.

Prataap has 14 manufacturing plants across nine Indian states. Though smaller unorganized companies dominate India's fried snacks landscape, branded products have boomed in recent years as consumers become health conscious and have higher disposable incomes to spend on packaged goods.

India's Moneycontrol news website reported on Dec. 19 that Prataap's founders and Peak XV were looking to sell a stake to investors and conglomerates, but did not name buyers.

Local snack makers like Prataap have struggled with inflationary pressures and rising competition in India, a price -conscious market, and its stock price is still hovering near its 2017 listing level.

Prataap in a November earnings report estimated India's snacks market was worth $5.2 billion, growing 14% each year.