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Tata Tea to acquire Tetley for Rs 4.87 billion

Tata Tea Limited, a member of the Tata group, and the present shareholders of the Tetley Group, UK, today announced that an agreement has been signed in terms of which Tata Tea will, through a 100 per cent subsidiary in the UK, make a formal offer for acquiring the entire shareholding of the Tetley group.

Tata Tea vice-chairman R K Krishna Kumar said in Bombay on Sunday afternoon that the acquisition will be financed with pound 70 million (about Rs 4.874 billion) of equity. Pound 60 million will be from Tata Tea India and pound ten million from Tata Tea Inc USA, a 100 per cent subsidiary of Tata Tea.

Tata Tea's GDR issue (which is presently underway) will finance pound 45 million (US $ 75 million) of the equity component. Of the debt component, pound 20 million will be financed from subordinate vendor loan notes and the balance will be raised through debt offerings arranged by Rabo Bank, which acted as the financial and strategic advisor as well as sole lead manager for this transaction.

The acquisition price for the worldwide Tetley Tea business, including the private label tea business in the USA, amounted to pound 271 million. This acquistion will not include the US coffee business of Tetley, which was recently sold by the existing shareholders of the Tetley group separately.

This acquistion represents the largest cross-border acquisition of an international brand by an Indian company. In a world where brand strength is a crucial business success factor, the acquisition of the Tetley brand will provide Tata Tea with a valuable and worthwhile global opportunity.

The existing Tetley management will continue to handle the day-to-day affairs of the company.The Tata Tea group has total confidence in the Tetley management which will be retained with such involvement from Tata Tea as may be required, Krishna Kumar added.

Krishna Kumar further stated that the Tata group has a turnover of approximately $ 8 billion.

The Tetley brand is one of the global tea brands and a market leader in the UK and Canada among others. Tetley has also had a distiguished history of innovations to its credit, including the original tea-bag and the draw string bag. The Tetley product portfolio currently covers not only tea-bags but also instant teas, flavoured teas, green teas, decaffeinated teas and herbal teas.

The welding of the strengths of Tata Tea with the Tetley group's strong market position in the UK, US, Canada, Australia and Europe, and its expertise in innovation, blending and marketing, will enable both the companies to bring about synergies and an agenda for aggressive growth and expansion worldwide, he added.

UNI

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