Shares of Tata Coffee rallied 13.07% on Wednesday after Tata Consumer Products announced the merger of all businesses of the company with itself as part of a reorganisation plan in line with its strategic priority of unlocking efficiencies and synergies.
Tata Coffee’s shares jumped 13.07 per cent from ₹ 196.25 to ₹ 221.90 apiece. The stock of Tata Consumer Products also rallied 5.28% to ₹ 782.50.
Tata Consumer Products Ltd (TCPL) on Tuesday announced the merger of all businesses of Tata Coffee Ltd with itself as part of a reorganisation plan.
While the plantation business of Tata Coffee Ltd (TCL) will be demerged into TCPL’s wholly-owned arm TCPL Beverages & Foods Ltd (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 restructuring initiative is in line with Tata Consumer Products’ strategic priorities – to unlock synergies and create a future-ready organization,” said Sunil D’Souza, MD & CEO, TCPL.
“This exercise will enable us to better leverage our supply chain, create customer-focused business verticals, and accelerate decision making and execution,” he added.
The demerger to happen as the first step and the merger to happen as the immediate second step, both being proposed through a composite scheme of arrangement.
Under the scheme, shareholders of TCL (other than TCPL) 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, it added.
“This will enable the consolidation and 100 per cent ownership of the branded, extractions & plantations business of TCL into TCPL and its wholly-owned subsidiary,” it said.
TCPL added that it proposes to purchase the minority interest in Tata Consumer Products UK Limited, TCL’s UK subsidiary by way of a share swap, through a preferential issue of its equity shares.
“The transactions will result in TCPL having 100% ownership of the business of TCL and of TCP UK, which will be an enabler for efficient reorganisation initiatives of its international business,” it said.
“This reorganization exercise will enable Tata Coffee to better leverage the strong coffee expertise we have and allow us to integrate more closely with TCPL’s branded coffee business, to propel it further,” Chacko Thomas, MD & CEO, Tata Coffee said.
“Combining our extractions business with TCPL’s tea extractions business will help us to strengthen our product offerings and unlock market potential by widening the portfolio and geographic reach,” he added.
“We believe this transaction will give TCL shareholders an opportunity to benefit from a much larger and faster-growing integrated F&B business under the aegis of TCPL,” he said.
TCPL now owns brands like TATA Salt, Tetley, TATA Tea, Eight O’clock, Tata Water Plus, Himalayan Water, Tata Gluco Plus, Tata Soulfull, and Tata Q and Tata Sampann.
TCPL has a reach of over 200 million households and an annual turnover of ₹11,600 crores with operations in India and International markets.
