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February 29, 2000
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Tata bags Tetley Tea
MUMBAI - In the biggest ever deal in Indian corporate history, Tata Tea Limited has bought out all the brands of Tetley Tea of the UK for stg271 million ($431.3 million).

This acquisition of the worldwide Tetley tea business, which is twice the size of Tata Tea, represents the largest cross-border takeover of an international brand by an Indian company.

As per the terms of agreement signed last night, TTL would make a formal offer for acquiring all the shareholding of the Tetley group through a 100 percent subsidiary in the UK.

The takeover includes the private label tea business in the US but excludes its coffee business there, which was recently sold by the existing shareholders separately.

Tata Group chairman Ratan Tata said it was a momentous occasion for the Tatas as this was the largest ever acquisition by an Indian company abroad in terms of acquiring an international brand. "It is a bold move and I hope that other Indian corporates will follow," he said.

The acquisition of Tetley will be financed with stg70 million of equity, of which stg60 million will be from TTL and stg10 million from its New York based subsidiary, Tata Tea Inc. TTL vice chairman R K Krishna Kumar said its GDR issue of stg45 million, which is presently under way, will part finance the equity component.

The debt component of stg20 million wouwillld be raised through instruments like subordinate vendor loan notes and debt offerings arranged by Rabo Bank, which acted as the financial and strategic advisor as well as sole lead manager for this transaction, he said. The loans, which would be raised in four tranches of tenors varying between 7.5 to 9.5 years, carry an average interest of 11 percent per annum.

(Asia Pulse)

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