Tata Coffee smells strong

Tata Coffee is among the top five gainers on the BSE. From its close of Rs.196.25, it opened at Rs.216 and went on to an intraday high at Rs.221.60. This is on the back of an over 9.5x rise in volumes.

The company has got a thumbs up from the new restructuring plans. Tata Consumer Products (TCPL) yesterday announced the merger of all businesses of Tata Coffee (TCL) with itself.

While the plantation business of TCL will be demerged into TCPL’s wholly-owned arm TCPL Beverages & Foods (TBFL), the remaining business of TCL, consisting of its extraction and branded coffee business, will be merged with TCPL.

The demerger would happen as the first step and the merger as the immediate second step, with both being proposed through a composite scheme of arrangement.

Under the scheme, shareholders of TCL (other than TCPL) will receive an aggregate of 3 equity shares of TCPL for every 10 equity shares held by them in TCL.

This will be carried out through the issuance of 1 equity share of TCPL for every 22 equity shares of TCL in consideration for the demerger.

For the merger, 14 equity shares of TCPL will be issued for every 55 equity shares of TCL.

This will enable the consolidation and 100% ownership of the branded, extractions and plantations business of TCL into TCPL and its wholly-owned subsidiary.

As on December 2021, TCPL holds a 57.48% stake in TCL.

The company also proposed to purchase of a 10.15 per cent minority interest in its UK subsidiary, TCP UK, from Tata Enterprise (Overseas), Switzerland, (TEO). For buying this, TCPL will issue 74,59,935 equity shares or 0.8% stake (computed on a post-preferential issue basis) to TEO, by way of a preferential issue in accordance with the applicable regulations.