The B M Khaitan-controlled McLeod Russel India has acquired Uganda’s Rwenzori Tea Investments for $25 million (Rs 117 crore), taking its total annual tea production to 96 million kg.
The acquisition is being carried out through Borelli Tea Holdings Ltd of the UK, which is a wholly-owned subsidiary of McLeod Russel India.
A share purchase agreement with James Finlay Ltd and James Finlay International Holdings Limited, both UK-based vendors, has been signed for 100 per cent share capital of Rwenzori Tea Investments.
Borelli would be required to pay a further $5 million (Rs 23 crore) to the vendors as inter-corporate debt payable for assignment of the debt. The transaction is scheduled to be completed on January 15, 2010. Aditya Khaitan, managing director, McLeod Russel, said the company was looking for more acquisitions in Africa and India.
Rwenzori holds 100 per cent of the equity capital of James Finlay (Uganda) Ltd, or JFUL. The company is engaged in growing, processing and marketing of black tea. It has six estates with annual production of around 15 million kg of black tea.
McLeod was the world’s largest bulk tea producer even before the acquisition of Rwenzori.
“It was a profit-making and dividend-paying company,” Khaitan said. He added the acquisition would give the company a presence in Uganda, which could lead to possible expansion of production.
With the group’s experience, the company hopes to enhance the quality of tea produced by JFUL and achieve a higher price realisation for tea.
