Mumbai: In a major streamlining of its businesses, Tata Sons Ltd. today transferred its consumer products business from Tata Chemicals Ltd (TCL) to Tata Global Beverages Ltd (TGBL).
“The Boards of Directors of Tata Global Beverages Limited (TGBL) and Tata Chemicals Limited (TCL), at their respective meetings held today, have approved the de-merger of the consumer products business of TCL into TGBL through a National Company Law Tribunal approved scheme of arrangement,” the companies said in a filing on the BSE.
Pursuant to the scheme, each shareholder of TCL will get 1.14 new equity shares of TGBL for every 1 equity share held in TCL. This means a shareholder holding 100 shares in TCL will receive 114 shares in TGBL.
The respective boards have approved the Entitlement Ratio based on the recommendations of independent valuers, the press statement said.
N Chandrasekaran, Chairman, Tata Sons said, “Tata Consumer Products consolidates our current presence in food & beverages in the fast-growing consumer sector. Through this combination, we have created o strong growth platform to meet the growing aspirations of Indian consumers.”
On Wednesday, Tata Global Beverages closed 1% lower at ₹198.50 on BSE, while Tata Chemicals shed 3% to close at ₹557. So far this year, Tata Chemicals has declined 21.2%, while Tata Global fell 9.2%.
The proposed transaction will create a focused consumer products company with a combined turnover and operating profit of ₹9,099 crore and ₹1,154 crore, respectively, for the twelve months period ended March 31, 2019, on a proforma basis.
“The combination of the two consumer-focused businesses will benefit both sets of shareholders who will be able to participate in a larger business poised to grow their share of the foods and beverages market with a broader exposure to the attractive and fast-growing FMCG sector,” the company said, adding that TCL shareholders will retain their ownership of a focused science-led chemistry solutions and specialty products company with a leading portfolio of products in basic and specialty chemicals and strong cash flows to support future growth.
The combined consumer business will also benefit from a total reach of over 200 million households, a broader portfolio to deepen distribution, enhanced innovation.
The turnover of the demerged division at ₹1,847 crore, represents 16% of the total turnover of the demerged company on a consolidated basis.
The transaction is subject to necessary statutory and regulatory approvals including approvals of the respective benches of NCLT, the stock exchanges, Securities and Exchange Board of India and the respective shareholders and lenders/creditors of each of the companies. The transaction is expected to be completed by the end of this fiscal.