Tata Group-owned FMCG major Tata Consumer Products Ltd on Friday said the company board has approved a Rs 6,500-crore fundraising plan to fund the recent acquisitions of Capital Foods and Organic India. The company will pay for the deals via commercial papers and rights issue.
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The company also said it will raise funds through the issuance and allotment of commercial papers for an amount not exceeding Rs 3,500 crore, which will be used for bridge funding to facilitate the payment of consideration for the proposed acquisition of Capital Foods Private and Organic India.
Apart from this, Tata Consumer will raise another Rs 3,000 crore by way of issue of equity shares of the company through rights issue for an amount not exceeding Rs 3,000 crore to eligible equity shareholders of the company.
Last week, Tata Consumer announced the acquisition of 100 per cent equity shares of Capital Foods, owner of the brands Ching’s Secret and Smith & Jones, for Rs 5,100 crore.
“The company has agreed to acquire 75 per cent shareholding of the target company. Balance 25 per cent shareholding of the target company to be acquired within 3 years,” it said.
Besides, the Tata Group company said it will buy out a 100 per cent stake in Fabindia-backed Organic India in an all-cash deal, at an enterprise value of Rs 1,900 crore, along with an additional earnout for the shareholders linked to FY2025-26 audited financials of the company.
On January 19, the company said: “Raising of funds through the issuance and allotment of Commercial Papers, for an amount not exceeding Rs. 3,500 crores, to be utilized for bridge funding to facilitate the payment of consideration for proposed acquisition of stakes in Capital Foods Private Limited and Organic India Private Limited.”
It added: “Raising of fund by way of issue of equity shares of the Company of face value Re. 1 each through Rights Issue for an amount not exceeding Rs. 3,000 crores to the eligible equity shareholders of the Company as on the record date (to be determined by the ‘Capital Raising Committee’ of the Board in due course) subject to receipt of statutory / regulatory approvals, as may be applicable in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosures Requirements) Regulations, 2018, and other applicable laws.”
On January 18, TCPL announced the restructuring of its overseas subsidiaries aimed at simplifying operational structures and creating a unified holding framework for its international branded businesses. The restructuring will see the merger of five US-based wholly owned entities and the wound up of two wholly owned subsidiaries, TCPL said in an exchange filing.
After the restructuring exercise, the US business of TCPL will be held 100% by TCP UK through its step-down subsidiaries.
As per the plan, Tata Tea Extractions Inc and Consolidated Coffee Inc (CCI) will transfer their businesses and net assets to Tata Consumer Products US Holdings (TCPUSH) and will close down operations.
Besides five wholly-owned US-based subsidiaries – Good Earth Corporation, Good Earth Teas Inc, Tata Waters LLC, Eight O Clock Holdings Inc and Eight O Clock Coffee Company – will merge into Tata Consumer Products US Inc (formerly known as Tetley USA Inc).
TCPL said that there will be two surviving entities in the US – Tata Consumer Products US Inc (TCPU) and TCPUSH. TCPU will operate the branded business and TCPUSH will be 100% holding company of TCPU and operating company for the US tea extraction business.
The restructuring plan will be implemented in a sequential manner and is expected to be completed by December 31, 2024.
Shares of Tata Consumer Products were trading at Rs 1,152.05, up by 0.44 per cent, at 12.10 PM.
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Tata Consumer is due to report its December-quarter results in the first week of February. Its shares have risen about 7 per cent so far this year, following a ~42 per cent rise in 2023.
