Tata Consumer Products to merge Tata coffee business with itself

Tata Consumer Products Ltd (TCPL) on Tuesday announced the merger of all Tata Coffee Ltd businesses with itself as part of a reorganization plan in line with its strategic priority to unlock synergies and efficiencies.

While the plantation business of Tata Coffee Ltd (TCL) will be spun off into TCPL Beverages & Foods Ltd (TBFL), a wholly-owned subsidiary of TCPL, the remaining business of TCL, consisting of its extraction and coffee business brand, will be merged with TCPL, the company said in a statement.

The spin-off should be the first step and the merger should be the immediate second step, both being offered as part of a composite scheme of arrangement. Under this plan, TCL shareholders (other than TCPL) will receive a total of 3 TCPL shares for every 10 shares they hold in TCL.

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This will be done by issuing one equity share of TCPL for every 22 equity shares of TCL in consideration for the spin-off. For the merger, 14 equity shares of TCPL will be issued for every 55 equity shares of TCL, he added.

“This will allow for the consolidation and 100% ownership of TCL’s branding, mining and planting businesses into TCPL and its wholly owned subsidiary,” he said. The boards of TCPL and TCL, at their respective meetings held on Tuesday, approved the combination of TCL’s plantation business with TBFL, he said.

TCPL further announced its intention to purchase the minority stake in its UK subsidiary, Tata Consumer Products UK Limited, by way of a share swap, through a preferential issue of its shares. “The transactions will allow TCPL to own 100% of the businesses of TCL and TCP UK, which will be a catalyst for effective reorganization initiatives of its international businesses,” he said.

As of December 2021, TCPL held a 57.48% equity interest in TCL. Commenting on the development, TCPL MD & CEO Sunil D’Souza said, “The restructuring initiative is in line with Tata Consumer Products’ strategic priorities – to unlock synergies and create a future-ready organization.

He added, “This exercise will allow us to better leverage our supply chain, create customer-focused verticals, and accelerate decision-making and execution.

It will be a springboard for further simplification initiatives to realize recurring operational, administrative and financial synergies, he said, adding, “We are confident that this will create significant value for all of our stakeholders.”

Chacko Thomas, Managing Director and CEO of Tata Coffee, said: “This reorganization exercise will allow Tata Coffee to better leverage the strong coffee expertise we have and allow us to integrate more closely into the business. of TCPL brand coffee, to propel it further.

He added, “Combining our extraction business with TCPL’s tea extraction business will help us strengthen our product offerings and unlock market potential by expanding portfolio and geographic reach.

Overall, Thomas said, “We believe this transaction will give TCL shareholders the opportunity to benefit from a much larger and faster growing integrated restaurant business under the TCPL umbrella.

After merging the consumer products business of Tata Chemicals with Tata Global Beverages, the company was renamed TCPL and now owns brands such as TATA Salt, TATA Tea, Tetley, Eight O’clock, Himalayan Water, Tata Water Plus and Tata Gluco Plus.

Its food portfolio includes brands such as Tata Salt, Tata Sampann, Tata Soulfull and Tata Q. The Tata Group company aspires to be a formidable player in the FMCG category, expanding its game in the existing category and venturing into new areas.

TCPL has a reach of over 200 million households and has an annual revenue of Rs 11,600 crore with operations in India and international markets.

(Edited by : Jomy Jos Pullokaran)


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