 "Tata consumer product, Sonnet")
Shares of Tata Coffee (TCL) and Tata Consumer Products (TCPL) rallied up to 13 per cent on the BSE in Wednesday’s intra-day trade after TCPL on Tuesday announced a reorganisation plan in line with its strategic priority of unlocking synergies and efficiencies.
Among the individual stocks, TCL rallied 13 per cent to Rs 220.90, while TCPL gained 5 per cent at Rs 779.80 on the BSE in intra-day trade so far. In comparison, the S&P BSE Sensex was up 0.60 per cent at 58,292 at 09:33 am.
The reorganisation plan includes the demerger of plantation business of TCL into TCPL Beverages & Foods Limited (TBFL), a wholly owned subsidiary of TCPL and the merger of the remaining business of TCL, consisting of its extraction and branded coffee business with TCPL.
The demerger is to happen as the first step and merger to happen as the immediate second step, both being proposed through a composite scheme of arrangement. Additionally, TCPL proposed to purchase the minority interest in its UK subsidiary, Tata Consumer Products UK Limited (TCP UK) by way of a share swap, through a preferential issue of its equity shares.
TCPL is currently engaged in a consumer product business, with food and beverages portfolio, with operations across the globe. The operations of TCL and its subsidiaries are substantially in instant coffee extraction, branded coffee and plantation businesses. TCL is currently a subsidiary of TCPL. The Scheme is being proposed with a view to simplifying the management and operational structures of the Companies in order to increase efficiencies and generate synergies, these companies has said in an exchange filing.
The consolidated actions are expected to generate material revenue, cost and other synergies over medium to long term, following the completion of the proposed transactions and future simplification initiatives, which will be undertaken following the receipt of requisite approvals and processes.
On effectiveness of the Scheme, the shareholders of TCL (other than TCPL) as on the record date will receive an aggregate of 3 equity shares of TCPL for every 10 equity shares held by them in TCL, through the issuance of 1 equity share of TCPL for every 22 equity shares of TCL, in consideration for the demerger (as per the approved share entitlement ratio); and 14 equity shares of TCPL for every 55 equity shares of TCL, in consideration for the merger (as per the approved share exchange ratio).
The merger of TCL and preferential allotment of equity share to Tata Enterprise would result in equity dilution to the tune of around 6 per cent. However, the company would be able to enhance its profitability by 5-10 per cent due to tax efficiencies, dividend repatriation and other operational synergies, ICICI Securities said in a note.
Among the individual stocks, TCL rallied 13 per cent to Rs 220.90, while TCPL gained 5 per cent at Rs 779.80 on the BSE in intra-day trade so far. In comparison, the S&P BSE Sensex was up 0.60 per cent at 58,292 at 09:33 am.
The reorganisation plan includes the demerger of plantation business of TCL into TCPL Beverages & Foods Limited (TBFL), a wholly owned subsidiary of TCPL and the merger of the remaining business of TCL, consisting of its extraction and branded coffee business with TCPL.
The demerger is to happen as the first step and merger to happen as the immediate second step, both being proposed through a composite scheme of arrangement. Additionally, TCPL proposed to purchase the minority interest in its UK subsidiary, Tata Consumer Products UK Limited (TCP UK) by way of a share swap, through a preferential issue of its equity shares.
TCPL is currently engaged in a consumer product business, with food and beverages portfolio, with operations across the globe. The operations of TCL and its subsidiaries are substantially in instant coffee extraction, branded coffee and plantation businesses. TCL is currently a subsidiary of TCPL. The Scheme is being proposed with a view to simplifying the management and operational structures of the Companies in order to increase efficiencies and generate synergies, these companies has said in an exchange filing.
The consolidated actions are expected to generate material revenue, cost and other synergies over medium to long term, following the completion of the proposed transactions and future simplification initiatives, which will be undertaken following the receipt of requisite approvals and processes.
On effectiveness of the Scheme, the shareholders of TCL (other than TCPL) as on the record date will receive an aggregate of 3 equity shares of TCPL for every 10 equity shares held by them in TCL, through the issuance of 1 equity share of TCPL for every 22 equity shares of TCL, in consideration for the demerger (as per the approved share entitlement ratio); and 14 equity shares of TCPL for every 55 equity shares of TCL, in consideration for the merger (as per the approved share exchange ratio).
The merger of TCL and preferential allotment of equity share to Tata Enterprise would result in equity dilution to the tune of around 6 per cent. However, the company would be able to enhance its profitability by 5-10 per cent due to tax efficiencies, dividend repatriation and other operational synergies, ICICI Securities said in a note.
Technical View - Tata Consumer Products
