Mumbai, May 25: Coca-Cola Company on Friday said it would acquire Glaceau for $4.1 billion in cash. Out of this, the $22-billion Tata group will get $1.2 billion for the 30 per cent stake it picked up last August in the vitamin-enriched water maker.

Glaceau is the second largest maker of enhanced water behind PepsiCo’s Propel. It will now operate as a separate business unit within Coca-Cola North America.

The top three executives of Glaceau — Darius Bikoff, Mike Repole and Mike Venuti -— plan to continue leading it for a minimum of three years, the companies said. Ratan Tata, who became chairman of Glaceau, is stepping down.

Coca-Cola said the deal would add to its earnings per share in the first full year after the agreement was completed.

The world’s largest beverage company said it would offer Glaceau’s vitamin water in North America, but added that the brand had attractive longer-term international opportunities as well.

The Tatas will be making a 77 per cent capital gain on their $677-million investment in Glaceau. They stand to gain an additional $577 million but there’s no word yet on how they plan to make use of this windfall.

While 50 per cent of Glaceau was held by its promoters, friends and associates, the remaining 20 per cent was held through a number of venture capital funds.

For a group that made India’s largest acquisition (Corus Group Plc) early this year, the stake sale to Coca-Cola is in many ways a rare event in its merger and acquisition history.

There are not many instances where Ratan Tata had to exit from a high-profile investment or acquisition.

The Tata group had invested in Glaceau as it had been attracted by the huge potential of its business and the significant advantages that the company would bring to its own products as well.

Health-conscious consumers in the US have been migrating to non-carbonated beverages like vitaminwater, fruitwater or smartwater which Glaceau has in its portfolio.

Since its inception in 1996, the company has experienced a compounded growth of more than 200 per cent. It sells more than five million bottles of its products every day.

The stake purchase last year gave the Tatas an opportunity to expand their beverage business as it provided a readymade platform to market their products.

Glaceau has an extensive distribution network in the US that cuts across all its states.

Asked why the group had sold its 30 per cent stake, R.K. Krishna Kumar, vice-chairman of Tata Tea who had played a key role in the acquisition, said the Tatas had become a minority shareholder in the company and it did not want to “stand in the way” of the majority stakeholder. “It’s not the Tata group’s style,” he added.