Tata Global Beverage Ltd (formerly Tata Tea) has acquired the balance 49 per cent stake of SuntyCo Holding Limited, the owner of the ‘Grand’ branded tea and coffee business in Russia, for an undisclosed amount, as per a stock market disclosure.
The Tata group firm had acquired 51 per cent in the Russian firm along with European Bank for Reconstruction & Development three years ago from Alexander Borisov. According to Tata Global Beverage’s annual report for FY12, the firm held majority stake in SuntyCo, but had effective voting power of 27.5 per cent.
Kahutara Holdings Limited, a 65 per cent subsidiary of Tata Global Beverages, which held 51 per cent in Suntyco Holding, had an irrevocable call option and Celeste Assets (promoter of SuntyCo) had an irrevocable put option to buy/sell the balance 49 per cent in Suntyco Holding, to be exercised in full in March 2012 or March 2013 or March 2014. The put and call option price was based on an agreed formula linked to the past cash profits.
In March 2012, Kahutara Holdings had issued a notice to exercise the call option to acquire the remaining 49 per cent of Suntyco Holding, held by Celeste Assets Limited. This acquisition now gives a better leeway to Tata Global Beverage to expand its tea as well as coffee business in the Russian market.
Grand has largely been focused on smaller cities in Russia and with Tatas muscle power and expertise in beverage field, the deal opened the vast lesser explored market for hot beverages in Russia.
Tata Global Beverage, together with its public listed subsidiary Tata Coffee, is one of the biggest global players in the tea and coffee business.
It was also one of the first Indian companies to look at large international business play with acquisition of Tetley over a decade ago. It already generates almost three fourth of its total revenues outside India and the Russian deal can be seen as part of the strategy of international expansion.
Back home, the firm had recently formed a joint venture with US-based iconic brand Starbucks to open coffee retail chain in India.
Tata Global has also been raising stake in some other firms such as Mount Everest Mineral Water, which sells premium packaged water brand Himalayan.