Tata Global Beverages Limited (TGBL) and Tata Chemicals Limited (TCL) on Wednesday approved the de-merger of consumer products business of TCL into TGBL through a National Company Law Tribunal (NCLT) approved a scheme of arrangement. The proposed transaction will create a focused consumer products company with a combined turnover and EBITDA (earnings before interest, taxes, depreciation and amortisation) of Rs 9,099 crore and Rs 1,154 crore, respectively, for the year ended March 31.
"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 and beverages market with a broader exposure to the attractive and fast-growing FMCG sector," TGBL said in a statement. TCL shareholders will retain their ownership of a focused science-led chemistry solutions and speciality products company with a portfolio of products in basic and speciality chemicals and strong cash flows to support future growth.
"The combined consumer business will also benefit from a combined reach of over 20 crore 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 shareholder," according to the statement. Each shareholder of TCL will get 1.14 new equity shares of TGBL for every one equity share held in TCL, that is 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 transaction is expected to be completed by the fourth quarter of 2019-20 or first quarter of 2020-21. Tata Sons Chairman N Chandrasekaran said: "Tata Consumer Products consolidates our current presence in food and 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."
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