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The Boards of Directors of Tata Global Beverages Limited (“TGBL”) and Tata Chemicals Limited (“TCL”), at their respective meetings held today, have approved the de-merger of the Consumer Products Business of TCL into TGBL through a National Company Law Tribunal (“NCLT”) approved scheme of arrangement (“Scheme”).
Pursuant to the Scheme, each shareholder of TCL will get 1.14 new equity shares of TGBL for every 1 equity share held in TCL i.e. a shareholder holding 100 shares in TCL will receive 114 shares in TGBL. The respective Boards have approved the Entitlement Ratio based on the recommendations of independent valuers.
The proposed transaction will create a focused Consumer Products Company with a combined turnover and EBITDA of Rs. 9,099 crore and Rs. 1,154 crore respectively, for the twelve months period ended March 31, 2019 on a proforma basis.
The combination of the two consumer-focused businesses will benefit both sets of shareholders who will be able to participate in a larger business poised to grow their share of the foods & beverages market with a broader exposure to the attractive and fast growing FMCG sector. TCL shareholders will retain their ownership of a focused science-led chemistry solutions and specialty products company with a leading portfolio of products in basic and specialty chemicals and strong cash flows to support future growth.
The combined consumer business will also benefit from a combined reach of over 200 million households, a broader portfolio to deepen distribution, enhanced innovation capabilities, as well as a strong product pipeline. In addition, the new consumer entity expects to achieve substantial revenue and cost synergies which will add value to its shareholders.
The transaction is subject to the necessary statutory and regulatory approvals including approvals of the respective benches of NCLT, the Stock Exchanges, SEBI and the respective shareholders and lenders/creditors of each of the companies. The transaction is expected to be completed by Q4 FY20 / Q1 FY21.
Commenting on the announcement, Mr. N Chandrasekaran, Chairman, Tata Sons said, “Tata Consumer Products consolidates our current presence in food & beverages in the fast-growing consumer sector. Through this combination, we have created a strong growth platform to meet the growing aspirations of Indian consumers.”
Mr. Ajoy Misra, Managing Director and CEO of TGBL, added:“This transaction is consistent with our strategy to deepen our India presence and transform into a broader FMCG player. Existing TGBL shareholders will benefit significantly as the Consumer Products Business increases our exposure to high growth product categories and provides a strong platform to seize new opportunities in this sector. We will also continue to nurture and grow our global brands.”
Mr. R Mukundan, Managing Director and CEO Tata Chemicals said: “This combination provides significant benefits to our shareholders by unlocking the value of our Consumer Products Business. In line with its strategy to be a leading science-based solutions company, Tata Chemicals will aggressively grow its Specialty Chemistry business in the areas of Agro-Science, Nutrition Science, Material Science and Energy Storage Science. In addition, the Basic Chemistry Business of Tata Chemicals will be the Global Partner of Choice for Soda Ash, Salt and Bicarbonate to leading brands of Food, Pharma, Detergents and Glass.”