Tata Coffee-Tata Consumer merger gives traders a shot at arbitrage

4% spread on offer; analysts bullish on long-term prospect of merged entity

Samie Modak Mumbai

Shares of TCL are currently hovering over Rs 216 per share, while those of TCPL are at Rs 750.

The impending merger between Tata Coffee (TCL) and Tata Consumer Products (TCPL) has presented an exciting arbitrage opportunity for traders. Considering the current prices of the two stocks and swap ratios, investors can pocket a spread of up to 4 per cent, observes a note by IIFL Securities.
To streamline business operations, Tata Group in March 2022 announced a merger between TCL and TCPL. Following the effectiveness of the scheme, the shareholders of TCL (other than TCPL) as on record date will receive three equity shares of TCPL for every 10 equity shares held in TCL. This will be done following the issuance of one equity share of TCPL for every 22 equity shares of Tata Coffee, in consideration for the demerger and 14 equity shares of TCPL for every 55 equity shares of Tata Coffee.
Shares of TCL are currently hovering over Rs 216 per share, while those of TCPL are at Rs 750. In other words, one can get exposure to TCPL (Rs 750 multipl

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First Published: Jan 18 2023 | 5:41 PM IST

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