Britannia plans bid for Typhoo

Apeejay also in race for UK's third-largest tea brand.

Britannia Industries is planning to take a tea break and join the race for acquisition of Typhoo tea, the third largest tea brand in the UK.

The other bidders for the brand, owned by Premier Foods, are the Kolkata-based Apeejay group and a London-based company. Both have put in their expressions of interest.

Sources close to the development said the acquisition cost would be in the region of £90-100 million (around Rs 675-750 crore).

Premier Foods is reported to have appointed Icelandic investment bank Islandsbanki to handle the sale of Typhoo, which is just behind Unilever's PG Tips and Tata Tea's Tetley brands in terms of sales.

The sources said the deal, if it materialised, would help the Rs 1,587-crore biscuit major of the Wadia group to make inroads into the flavoured tea market at a time when global consumption of black tea had been decreasing.

When contacted, a top Britannia executive said the company had "no comments to make at this stage" and did not wish to elaborate on the diversification bid.

Industry sources said funding the proposed bid would not be a problem for the biscuit major, which had not made any major acquisition in the recent past. Britannia has been the undisputed leader in the Rs 4,500-crore biscuit market for quite some time, though there has been a slight reduction in its market share.

Tea industry sources said the proposed move to acquire Typhoo by two Indian majors was in step with India Inc's intense desire to leave a global footprint.

Winning of the bid by either Apeejay or Britannia will be unique in itself as it will be Indian companies controlling the second and third largest tea brands in Britain. Tata Tea, which already owns Tetley, could not bid for Typhoo due to trade restrictions in the UK.

Also, if Typhoo goes to Britannia or the Apeejay group, it will be the second largest overseas deal by an Indian tea company. Tata Tea had acquired Tetley for £271 million (Rs 2,168 crore) nearly five years ago.

John Sumner, a Birmingham grocer, had launched the Typhoo brand in 1903, after his sister declared that tea cured her indigestion. Typhoo was the first tea to be sold pre-packaged and was available at chemists and grocery shops with a label that read, "Typhoo, the tea the doctor's recommend."

During World War I, Typhoo was exempted from rationing after doctors and consumers overwhelmed the government with complaints. Typhoo merged with Schweppes in 1968. In 1986, Typhoo was sold in a management buyout that formed the Premier brands.

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TEA BREAK

The acquisition cost will be around Rs 675-750 crore

The deal may help Britannia to make inroads into the flavoured tea market

If it succeeds, it will be the second-largest overseas deal by an Indian tea company