Tata Coffee is going to merge with Tata Consumer Products in the Tata Group’s second major restructuring of its food and beverages operations in recent years.
Apart from that, the latter will spend Rs 571 crore to increase its stake in its UK arm to 100% from the current 90%. Earlier, the group had merged the salt and branded lentils businesses of Tata Chemicals with Tata Consumer.
The contours of the transaction include the group first separating the plantations business from Tata Coffee and housing it under a 100% arm of Tata Consumer. It will then merge the remaining business of Tata Coffee, which covers branded coffee, including the ownership of American Brand Eight o’clock, with Tata Consumer.
Tata Consumer maintains 57% of Tata Coffee while the public holds the remaining 43%. In consideration for the demerger and amalgamation, the group will issue three equity shares of Tata Consumer to Tata Coffee’s public shareholders for every 10 shares held by them. After the share allocation, the public shareholding in Tata Consumer will go up to 66% from 65%.
The plantations business, which includes 18 coffee and pepper estates and the roasting and ground coffee facility in Kushalnagar, Karnataka, had a turnover of Rs 376 crore in fiscal 2021.
The turnover represented 51% of Tata Coffee’s standalone turnover of Rs 737 crore during the said period. The plantations business will be transferred to TCPL Beverages and Foods, which was incorporated in February this year.
Tata Consumer will infuse about Rs. 8 crores into this company, it said on Tuesday. Speculation about the group combining the coffee business with Tata Consumer has been on and off for several years.