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Tata Consumer Products Limited (TCPL) announced a reorganisation plan in line with its strategic priority of unlocking synergies and efficiencies.
The plan includes the demerger of the plantation business of Tata Coffee Limited (TCL) into TCPL Beverages & Foods Limited (TBFL), a wholly-owned subsidiary and the merger of the remaining business, consisting of its extraction and branded coffee business. The demerger will happen as the first step and merger to happen as the immediate second step. Both the steps are being proposed through a composite scheme of arrangement.
Additionally, TCPL proposes to purchase the minority interest in its UK subsidiary, Tata Consumer Products UK Limited (TCP UK) by way of a share swap, through a preferential issue of its equity shares.
Composite scheme
The Boards of Directors of Tata Consumer Products Limited and Tata Coffee Limited, at their respective meetings held on Tuesday, approved the combination of plantation business of TCL with TBFL and non-plantation business with TCPL through a composite scheme of arrangement for demerger and merger (“scheme”). 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.
On effectiveness of the scheme, the shareholders of TCL (other than TCPL) as on the record date will receive an aggregate of three equity shares of TCPL for every 10 shares held by them in TCL.
The Board of Directors of TCPL at their meeting have also approved the purchase of 10.15 per cent minority interest in TCP UK, from Tata Enterprise (Overseas) AG, Switzerland (TEO). As consideration, TCPL will issue 74,59,935 equity shares (0.80 per cent stake computed on post preferential issue basis) to TEO, by way of preferential issue in accordance with the applicable regulations.
Subject to approval
This is subject to TCPL shareholders’ approval and other regulatory approvals.
The transactions will result in TCPL having 100 per cent ownership of the business of TCL and of TCP UK, which will be an enabler for efficient reorganisation initiatives of its international business. The transactions, along with future reorganisation, will help unlock value for both TCPL and TCL shareholders who are expected to benefit from the resulting efficiencies and operational, administrative and financial synergies.
Commenting on the announcements, Sunil D’Souza, MD & CEO, Tata Consumer Products, said: “The restructuring initiative is in line with Tata Consumer Products’ strategic priorities — to unlock synergies and create a future ready organisation.”
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