Financial Daily from THE HINDU group of publications
Tuesday, Dec 13, 2005
Financial Daily from THE HINDU group of publications Tuesday, Dec 13, 2005 |
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Tea Corporate - Mergers & Acquisitions McLeod Russel close to acquiring Doom Dooma Tea — Size of deal likely to be Rs 50-60 cr Kohinoor Mandal
Kolkata , Dec. 12 MCLEOD Russel India Ltd, a BM Khaitan Group company and a bulk tea producer, is close to acquiring Assam-based Doom Dooma Tea Co Ltd, a wholly owned subsidiary of Hindustan Lever Ltd. Industry sources said McLeod Russel, which was recreated after de-merging the tea division of Eveready Industries India Ltd in June 2004, has succeeded in outbidding several tea companies, and the deal is likely to be struck within a few days. Others in the race were Apeejay Surrendra Group of Karan Paul, Dhunseri Tea of C.K. Dhanuka, Mumbai-based MK Shah Exports, and Mr Vinay Goenka's Warren Tea. Though neither of the two companies was willing to go on record, sources said the size of the deal, going by average industry norms, would be Rs 50-60 crore. Doom Dooma has a plantation area of 3,100 hectares spread over seven tea estates in Tinsukia district of Assam. It has three factories and employs 6,100 people. In 2002, the division reported an operating loss of Rs 6.7 crore, followed by Rs 21.9 crore in 2003 and Rs 7.6 crore in 2004. Second acquisition: This will be McLeod Russel's second major acquisition this year. In June, it acquired all the 17 gardens of Williamson Tea Assam Ltd, owned by its erstwhile partner, Mr Philip Magor (based in the UK). This acquisition cost the Khaitans Rs 208 crore. McLeod Russel started off with an initial capacity of 42 million kg. The Williamson Tea Assam acquisition helped in increasing it to 62 million kg. Doom Dooma's capacity is 17 million kg. If it comes into the McLeod Russel fold, the company's total annual bulk tea production would rise to 80 million kg. Doom Dooma Tea Co was earlier known as the Tea Plantation Division (Assam) of HLL. In April, Levers announced the de-merger of this division. Later, it was spun off into a wholly owned subsidiary. HLL had stated the hive off was because it had decided to move out of the plantation business and concentrate more on marketing. The Hindustan Lever stock closed the day at Rs 186.30, down Rs 2.60 for the day while the McLeod Russel share closed at Rs 60.35, lower by Rs 1.70 compared to the last closing price.
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