Tata to merge consumer business into Tata Consumer Products

The new entity combining key Tata brands such as `Tata Salt’, `Tata Tea’, `Tata Sampann’ and `Tetley’ will reach over 200 million households, giving it an unparalleled ability to leverage the Tata brand in consumer products, Tata Group stated. 

The boards of directors of Tata Global Beverages Limited (TGBL) and Tata Chemicals Limited (TCL), at their respective meetings held today, approved the de-merger of the consumer products business of TCL into TGBL through a National Company Law Tribunal (NCLT) approved scheme of arrangement, to create a Rs9,099 crore entity.

Pursuant to the scheme, each shareholder of TCL will get 1.14 new equity shares of TGBL for every 1 equity share held in TCL, ie, a shareholder holding 100 shares in TCL will receive 114 shares in TGBL. The respective boards also approved the entitlement ratio based on the recommendations of independent valuers.

The proposed transaction will create a focused consumer products company with a combined turnover and EBITDA of Rs9,099 crore and Rs1,154 crore, respectively, for the twelve months period ended 31 March 2019 on a proforma basis, says a Tata Group release.

The combination will help the product portfolio of the two consumer-focused businesses, benefiting shareholders who will be able to participate in a larger business poised to grow their share of the foods and beverages market with a broader exposure to the attractive and fast-growing FMCG sector. 

The combined consumer business will also benefit from a combined reach of over 200 million households, a broader portfolio to deepen distribution, enhanced innovation capabilities, as well as a strong product pipeline. In addition, the new consumer entity expects to achieve substantial revenue and cost synergies which will add value to its shareholders.  

The transaction is subject to the necessary statutory and regulatory approvals, including approvals of the respective benches of NCLT, the stock exchanges, SEBI and the respective shareholders and lenders/creditors of each of the companies. 

The transaction is expected to be completed by the fourth quarter of the current financial year or latest by the first quarter of the next financial year.

“Tata Consumer Products consolidates our current presence in food & beverages in the fast-growing consumer sector. Through this combination, we have created a strong growth platform to meet the growing aspirations of Indian consumers,” N Chandrasekaran, chairman, Tata Sons, said.

“This transaction is consistent with our strategy to deepen our India presence and transform into a broader FMCG player. Existing TGBL shareholders will benefit significantly as the consumer products business increases our exposure to high growth product categories and provides a strong platform to seize new opportunities in this sector. We will also continue to nurture and grow our global brands,” Ajoy Misra, managing director and CEO of TGBL, added.

“This combination provides significant benefits to our shareholders by unlocking the value of our consumer products business. In line with its strategy to be a leading science-based solutions company, Tata Chemicals will aggressively grow its specialty chemistry business in the areas of agro-science, nutrition science, material science, and energy storage science. In addition, the basic chemistry business of Tata Chemicals will be the global partner of choice for soda ash, salt, and bicarbonate to leading brands of food, pharma, detergents and glass.” R Mukundan, managing director and CEO of Tata Chemicals, added.