labels: foods / beverages, soft drinks, tata tea, m&a
Tata Tea to get $1.2 billion as Coke news
25 May 2007
Mumbai: Soft-drink giant Coca-Cola Co will acquire Vitaminwater maker Glaceau for $4.1 billion in cash. Both the boards have approved the transaction.

In a statement, Atlanta-based Cocoa-Cola, the world's largest aerated drinks firm, said it has reached an agreement with Energy Brands, also known as Glaceau, for the acquisition.

Glaceau is 30 per cent owned by Tata Tea Ltd., and is the No. 2 maker of enriched water behind PepsiCo Inc.'s Propel.

Tata Tea Ltd. said on Friday it would receive about $1.2 billion for selling its 30 per cent stake in Vitaminwater maker Glaceau to Coca-Cola Co.

Tata Tea bought the 30 per cent stake last August for $677 million. Twenty-five per cent of the stake was held by its UK subsidiary, Tata Tea (GB) Investments Ltd., and its holding company Tata Sons had the other 5 per cent.

Glaceau sold 77 million cases of enriched water last year, compared with Propel's 95 million, according to industry publication Beverage Digest.

At the time of the transaction, Tata group had projected Glaceau's annual revenue to nearly double to $700 million in 2007.

Based on the price of Tatas' acquisition, New York-based Glaceau could be valued at close to $2.25 billion. The acquisition price of $4.1 billion represents a significant premium to the price paid by Tata group.

Ahead of the announcement, Tata Tea shares surged more than 7 per cent to a 5-onth high of Rs941.25 before closing up 4 per cent at Rs913.65.

The acquisition of glaceau, formally known as Energy Brands Inc., will expand Coke's non-carbonated beverage line. It is also expected to add to Coke's earnings in the first full year if the deal closes this summer.

In addition to Vitaminwater, glaceau also makes smartwater, fruitwater and vitaminenergy brands. Coke said enhanced water and energy drink categories are expected to make up a large portion of the beverage industry's volume and gross profit growth in North America through 2010.

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Tata Tea to get $1.2 billion as Coke