The Hindu Business Line : Infusion of opportunity

Tata Tea, hamstrung by limited opportunities in the beverages market, is backing the inorganic growth route yet again. The Tata group has signed an agreement to acquire TSG Consumer Partners' stake in Glacéau (Energy Brands), the makers of vitaminwater, and infuse additional capital. Tata Tea and Tata Sons will invest $677 million (about Rs 3,150 crore) for a 30 per cent equity stake in Glacéau. Tata Tea proposes to invest about $192 million, Tata Sons $58 million and the balance will be infused by Tata Tea (GB) through the debt route.

This acquisition will help Tata Tea broadbase its basket of brands across the non-alcoholic beverages space in the US. The company is better poised to tap opportunities in this segment as the company now has three product lines — tea, coffee and water — which also comprises carbonated drinks and beer. Glacéau produces nutrient-enhanced water.

The company has grown at a rapid clip, with a revenue growth of about 200 per cent since its inception in 1996. Glacéau is expected to clock a scorching pace of about 100 per cent over the next year, with expected revenues of $350 million.

Though the debt-equity ratio is a cause of concern, the Tata group's record of successfully integrating its overseas acquisitions is likely to offer its shareholders a measure of comfort.

Alagappan Arunachalam

More Stories on : Mergers & Acquisitions | The Big Deal | Tea | Tata Tea Ltd

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