Mumbai, Aug. 23: The Tatas created a little bit of history today by acquiring a 30 per cent stake in US-based energy drink-maker Glacéau for $677 million (Rs 3,150 crore), making it the biggest cross-border deal by an Indian private sector company.
Tata Sons — the holding company of the group — and Tata Tea will be jointly acquiring this stake from TSG, a private equity firm.
State-owned ONGC Videsh currently holds the record for the biggest overseas deal by an Indian company after a buyout in Brazil for $1.4 billion.
Today’s deal was cleared by the boards of Tata Sons and Tata Tea. It is being transacted through Tata Tea GB Ltd, which includes Tetley Tea’s operations worldwide.
Initially, the Tata group will nominate the chairman of the company. It will have two directors on Glacéau’s board, which consists of five members.
The deal is the third major overseas acquisition by the Tatas in 2006. In May, Tata Tea acquired Jemca of the Czech Republic for an undisclosed amount. In June, Tata Coffee, a subsidiary of Tata Tea, bought a 51 per cent stake in US-based Eight ’Clock Coffee for $220 million (Rs 1,015 crore).
The acquisition will significantly expand the Tata beverage business as it provides them a readymade platform to market its products. Glacéau has an extensive distribution network in the US. There is a possibility that Glacéau products will be introduced in India over a period of time.
Formed in 1996, Glacéau makes energy drinks that come under the so-called “enhanced water category”. The products include Vitaminwater which is nutrient-enhanced, Fruitwater which is flavour-enhanced, and Smartwater.
Explaining why the packaging tea company was acquiring a stake in an energy drink-maker, R.K. Krishna Kumar, vice-chairman of Tata Tea, said: “We are a beverage company and we are going for a share of the bladder.”
The deal will be funded partly by $484 million of debt. Tata Sons and Tata Tea will fork out the rest.