Tata Tea prices GDR at discount

Tata Tea prices GDR at discount
ENS ECONOMIC BUREAU

MARCH 3: Tata Tea Limited which is acquiring the Tetley group of the UK has priced its Global Depository Receipt (GDR) at US $ 9.87 (around Rs 430) per GDR. The pricing is at a 5 per cent discount to TTL's volume-weighted average price of Rs 452.786 quoted on the Bombay Stock Exchange on March 2.

Credit Suisse First Boston said TTL offered 75.98 lakh GDRs netting a total amount of $ 75 million to part-finance the acquisition of UK-based group for pound sterling 271 million.

The GDRs are to be listed on the Luxembourg Stock Exchange and commenced trading yesterday and closed at $ 10.10, CSFB said in a statement here today. Cazenove & Co, HSBC and Jardine Fleming Securities Ltd were co-lead managers of the offering. The issue, which attracted high-net worth investors from Asia, US, Europe and other regions, has generated an oversubscription of around $20 million.

On the Bombay Stock Exchange, Tata Tea hit the lower end of circuit on Friday to close at Rs 418.65 against Thursday's close of Rs 455. The scrip, which opened at Rs 430, touched an intra-day high of Rs 434.

Tata Tea will acquire all the businesses of Tetley except its US coffee business through the creation of a special purpose vehicle (SPV) -- Tata Tea (Great Britain). "The proceeds of the GDR issue will be utilised for funding a part of Tata Tea's investment in its overseas wholly-owned subsidiary, Tata Tea (Great Britain), in connection with the acquisition of the worldwide tea business of the Tetley group," the Tata group said in a statement.

Tetley, which owns the second-largest tea brand globally, has a sales turnover of Rs 1,800 crore, which is almost double the sales of Tata Tea. With this acquisition, the Tata Tea-Tetley combine will have a gross turnover of close to Rs 3,000 crore, with significant presence in Asia, Europe, North America and Australia.

Besides the GDR mop-up, the acquisition will be part-funded through a 200 million pound debt offering by Tata Tea (Great Britain). The SPV will be capitalised at 70 million pounds, of which 45 million pounds ($75 million) will flow from the GDR proceeds while 15 million pounds will come from Tata Tea.