Tata Consumer: The major FMCG firm owned by the Tata Group, Tata Consumer Products Ltd., announced on Friday that the board of directors had authorized a plan to raise Rs. 6,500 crore to finance the recent acquisitions of Capital Foods and Organic India. The business will use commercial documents and rights issues to pay for the agreements.
In addition, the business announced that it will issue and allocate up to Rs 3,500 crore in commercial papers in order to acquire money for bridge financing that would enable the payment of consideration for the proposed acquisition of Capital Foods Private and Organic India.
In addition, Tata Consumer plans to offer equity shares of the firm through a rights issue to qualifying equity shareholders for a maximum sum of Rs 3,000 crore, in order to raise an additional Rs 3,000 crore. The purchase of 100% of Capital Foods’ equity shares—owner of the Ching’s Secret and Smith & Jones brands—for Rs 5,100 crore was announced by Tata Consumer last week.
“The company has committed to purchasing 75% of the target company’s shares. Within three years, the target company’s 25% equity will be purchased in balance,” the statement stated. Also, the Tata Group company announced that it will acquire a 100% share in Organic India, which is supported by Fabindia, for Rs 1,900 crore in cash, plus an additional earnout for shareholders based on the company’s audited financial statements for the fiscal years 2022–2026.
On January 19, the company announced its intention to raise funds by issuing and allotting Commercial Papers, with a maximum value of Rs. 3,500 crores. The purpose of this capital infusion is to provide bridge funding, facilitating the payment required for the proposed acquisition of ownership stakes in Capital Foods Private Limited and Organic India Private Limited.
The company also announced its intention to raise funds by issuing equity shares with a face value of Re. 1 each through a Rights Issue. The targeted amount for this issuance is set at a maximum of Rs. 3,000 crores. The Rights Issue will be extended to eligible equity shareholders of the company as of the yet-to-be-determined record date, to be decided by the ‘Capital Raising Committee’ of the Board. This initiative is contingent upon obtaining necessary statutory and regulatory approvals, in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosures Requirements) Regulations, 2018, and other relevant laws.
TCPL said on January 18 that it was restructuring its foreign subsidiaries with the goal of streamlining operating frameworks and establishing a single holding company for its globally branded enterprises. According to TCPL’s exchange filing, the restructuring will result in the winding up of two totally owned subsidiaries and the amalgamation of five US-based fully owned corporations.
Following the reorganization process, TCP UK will own 100% of TCPL’s US company through its step-down subsidiaries. In accordance with the plan, Tata Tea Extractions Inc. and Consolidated Coffee Inc. (CCI) will shut down operations and transfer their companies and net assets to Tata Consumer Products US Holdings (TCPUSH). In addition, Tata Consumer Products US Inc (previously Tetley USA Inc) will combine with five wholly-owned US-based subsidiaries: Good Earth Corporation, Good Earth Teas Inc, Tata Waters LLC, Eight O Clock Holdings Inc, and Eight O Clock Coffee Company.
TCPL said that Tata Consumer Products US Inc (TCPU) and TCPUSH will be the two remaining entities in the US. The branded business will be run by TCPU, while TCPUSH will serve as both the US tea extraction business’s operating company and TCPU’s 100% holding company.
The plan for restructuring will be executed step-by-step and is anticipated to be finished by December 31, 2024. At 12:10 PM, shares of Tata Consumer Products were up 0.44 percent, trading at Rs 1,152.05. In the first week of February, Tata Consumer is scheduled to release its results for the December quarter. Its stock has increased by over 7% so far this year, after rising by roughly 42% in 2023.
