The Hindu Business Line : McLeod Russel gains on merger hopes

MCLEOD Russel India, a B M Khaitan group's tea company, gained in Monday's trading on expectations of a merger of various tea companies of the group with it.

McLeod Russel was listed on Friday after its de-merger from Eveready Industries.

In today's trading, the stock rose 16.47 per cent at Rs 58.70 on the BSE with volumes of 19.55 lakh shares; on the NSE, it closed at Rs 58.90, up 16.63 per cent, with volumes of 43.93 lakh shares.

Of the total traded shares, 18 per cent was up for delivery on the BSE and 33.10 per cent on the NSE.

According to analysts, the expectation of a merger of various tea companies of B M Khaitan group arises after the open offer from McLeod Russel, along with other group companies, to the shareholders of Williamson Tea Assam following its acquisition of 70 per cent stake in Borelli Tea Holdings Ltd, UK, the holding company of Williamson Tea Assam.

The offer, which opened today, is to acquire 20 per cent of the shares of Williamson Tea Assam at Rs 145 a share.

"This could pave the way for merger in future and create amongst the largest tea plantation companies in the world," said Mr Nikhil Thacker, Asst Vice-President (Research), Asit C Mehta Investment intermediates.

However, company officials were not available for comments on the possibility of merger of group tea companies.

Other analysts said the de-merger of bulk tea business from Eveready Industries is the first step towards consolidation of the group tea business.

"It does not make sense to have several companies, both listed and unlisted, into the same business," said an analyst with a domestic broking firm.

He said if the consolidation happens, McLeod Russel would get a good valuation compared to other tea companies.

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