Tata Consumer Products (TCPL) on Tuesday announced the merger of all businesses of Tata Coffee with itself as part of a reorganisation plan in line with its strategic priority of unlocking synergies and efficiencies.
The plantation business of Tata Coffee (TCL) will demerge into TCPL's wholly-owned arm TCPL Beverages & Foods (TBFL). The remaining business of TCL, consisting of its extraction and branded coffee business, will be merged with TCPL, the company said in a statement.The demerger will happen as the first step and the merger will happen as the immediate second step, both being proposed through a composite scheme of arrangement.
On effectiveness of the scheme, the shareholders of TCL (other than TCPL) as on the record date will receive an aggregate of 3 equity shares of TCPL for every 10 equity shares held by them in TCL.
This will be carried out through the issuance of 1 equity share of TCPL for every 22 equity shares of TCL in consideration for the demerger. For the merger, 14 equity shares of TCPL will be issued for every 55 equity shares of TCL.
This will enable the consolidation and 100% ownership of the branded, extractions & plantations business of TCL into TCPL and its wholly owned subsidiary.
Through this transaction, TCL shareholders will get access to multiple growth engines and participation in a larger and fast growing FMCG business. TCPL shareholders are expected to benefit from better synergies and business efficiencies going forward.
Additionally, the board of TCPL has approved the purchase of 10.15% minority interest in its UK subsidiary, TCP UK, from Tata Enterprise (Overseas) AG, Switzerland (TEO). As consideration, TCPL will issue 74,59,935 equity shares i.e. 0.80% stake (computed on post preferential issue basis) to TEO, by way of preferential issue in accordance with the applicable regulations. The above transactions, along with future reorganization, will help unlock value for both TCPL and TCL shareholders who are expected to benefit from the resulting efficiencies and operational, administrative and financial synergies.
Commenting on the announcements, Sunil D'Souza, MD & CEO, TCPL said "The restructuring initiative is in line with Tata Consumer Products' strategic priorities - to unlock synergies and create a future ready organization. This exercise will enable us to better leverage our supply chain, create customer focused business verticals, and accelerate decision making & execution. This will be a stepping-stone for further simplification initiatives with a view to achieving recurring operational, administrative and financial synergies. We are confident that this will create significant value for all our stakeholders."
Tata Consumer Products is a focused consumer products company uniting the principal food and beverage interests of the Tata Group under one umbrella. The Company's portfolio of products includes tea, coffee, water, RTD, salt, pulses, spices, ready-to-cook and ready-to-eat offerings, breakfast cereals, snacks and mini meals. Tata Consumer Products is the 2nd largest branded tea company in the world.
Tata Coffee is a subsidiary of TCPL with 57.48% of TCL's equity share capital held by TCPL. Tata Coffee holds the majority stake in the Eight O' Clock Coffee business, the 4th largest Roast & Ground coffee brand is the USA. Tata Coffee is one of the largest integrated coffee companies as well as one of the largest exporters of Instant Coffee in Asia. Its business span Coffee including Pepper and Tea plantations and instant coffee/extractions business in India and Vietnam. It also has roast and ground facilities for 'Tata Coffee Grand' which is marketed by TCPL.
Shares of Tata Consumer Products jumped 3.85% to Rs 771.90.
Shares of Tata Coffee surged 8.51% to Rs 212.95.
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