Tata Global, Tata Chem hit 52-wk high on NCLT nod for scheme of arrangement

Shares of Tata Group companies -- Tata Global Beverages and Tata Chemicals -- hit their respective 52-week highs on the BSE on Monday after the National Company Law Tribunal (NCLT) approved the scheme of arrangement between the two companies.

Tata Global Beverages was trading higher for the fifth straight day, hitting a fresh 52-week high of Rs 351, up 3 per cent on the BSE. The stock has rallied 13 per cent in the past one week, as compared to a 3 per cent rise in the S&P BSE Sensex. Tata Chemicals too hit 52-week high of Rs 704, up 2 per cent today, gained 7 per cent in the past five trading days.

The Scheme will become effective upon filing of the certified copy of the Orders of the Hon 'ble NCLT, Kolkata Bench and Mumbai Bench with the respective Registrar of Companies. The effective date of the Scheme will be communicated to the stock exchanges for further public dissemination, Tata Global Beverages said in a filing to exchanges.

In May last year, Tata Group had decided to demerge consumer business of Tata Chemicals and merge it with Tata Global Beverages. Tata Global Beverages will be renamed as Tata Consumer Products, the group had announced.

Under the scheme, every shareholder of Tata Chemicals will get 1.14 new equity shares of Tata Global Beverages for every one equity share held in Tata Chemicals. It means that shareholders having 100 shares in Tata Chemicals will receive 114 shares in Tata Global Beverages.

The management said the combination of the two consumer-focused businesses will benefit both sets of shareholders who will be able to participate in a larger business poised to grow their share of the foods & beverages market with a broader exposure to the attractive and fast growing FMCG sector.

Tata Chemicals shareholders will retain their ownership of a focused science-led chemistry solutions and specialty products company with a leading portfolio of products in basic and specialty chemicals and strong cash flows to support future growth.

“On the synergy front, the Tata Global Beverages is targeting 2-3 per cent incremental EBITDA margin in 18-24 months post the merger with a significant chunk coming from a 20 per cent increase in distribution network for tea/salt and utilization of unused GST credit from the tea business in the spices/pulses businesses”, analysts at Systematix Shares and Stocks (India) said in a company update.