Tata Consumer Products (TCPL) announced the merger of all businesses of Tata Coffee with itself under its reorganisation plan. As per its Composite Scheme of Arrangement, the company aims to emerge as a strong market player in the fast-moving consumer goods segment by unlocking synergies and efficiencies.
The organisation has decided to demerge its plantation business of Tata Coffee Limited into TCPL Beverages & Foods Limited (TBFL), which is a TCPL subsidiary. And then merge the remaining business, including the extraction and branded coffee business, with TCPL.
Talking about the restructuring plan, Sunil D’Souza, managing director (MD) and chief executive officer (CEO) at 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. This exercise will enable us to better leverage our supply chain, create customer-focused business verticals, and accelerate decision making and execution.”
How will the merger affect the stakeholders?
While the demerger is the first step to its reorganisation plan, the second step is to merge the coffee business with Tata Consumer Products.
Under this, TCPL will acquire a 10.15 % stake in Tata Consumer Products UK Group for INR 570.8 crore. Hence, shareholders of Tata Coffee will receive an aggregate of 3 equity shares of Tata Consumer Products for every 10 equity shares held by them in Tata Coffee as part of the demerger. For the merger, the company will issue 14 equity shares of TCPL for 55 equity shares of TCL.
Tata Coffee MD & CEO Chacko Thomas said, “This reorganisation exercise will enable Tata Coffee to better leverage the strong coffee expertise we have and allow us to integrate more closely with TCPL’s branded coffee business, to propel it further.” He added, “Combining our extractions business with TCPL’s tea extractions business will help us to strengthen our product offerings and unlock market potential by widening the portfolio and geographic reach.”
The restructuring will simply the company’s operation by cutting expenses, optimising operational efficiencies, and administrative and financial synergies.
Tata Consumer Products’ share price saw a 5 per cent hike at INR 742.95, earning 36.05 profits after the company announced the merger and acquisition news.
