Tata Coffee to merge with Tata Consumer, TCPL Beverages on Jan 1; stocks hit 52-week highs

Shares of Tata Coffee and its parent Tata Consumer Products will be in focus today amid report of demerger and amalgamation into another Tata Group company TCPL Beverages & Foods (TBFL). The proposed merger will be effective from January 1. The record date for the share swap has been set as January 15.

Reacting to the news, shares of Tata Coffee rose as much as 4.2% to hit a fresh 52-week high of ₹321.15 in early trade today, while the market capitalisation rose to ₹5,922 crore. The Tata Group stock opened higher at ₹312.25 against the previous closing price of ₹308.15 on the BSE. The stock has been rising for the last five sessions and climbed 10.5% during the same period.

In a similar trend, Tata Consumer shares opened higher at ₹1,063 against the previous closing price of ₹1,042.10 on the BSE. Extending opening gains, TCPL shares jumped 3.5% to touch its new 52-week high of ₹1,078.20, while the market capitalisation increased to ₹99,088 crore. The counter has maintained uptrend for the last eight sessions since December 19 and rose 13.5% during the same period.

In separate exchange filings on December 28, Tata Coffee and TCPL notified the effective date of the composite scheme of arrangement among TCPL, Tata Coffee (TCL), and TBFL and their respective shareholders and creditors.

“The Scheme Implementation Committee of the Board of TCPL and the respective Board of Directors of TCL and TBFL have acknowledged that the conditions under Clause 29 of the Scheme, including filing of the certified copies of the order with the Registrar of Companies in form INC-28, are duly fulfilled,” the filing notes.

“Accordingly, in terms of the scheme, the appointed date and the effective date of the scheme are January 1, 2024,” it says.

The record date, for the purpose of determining the eligible shareholders of TCL to whom equity shares of TCPL would be allotted following the demerger and the amalgamation is January 15, 2024, the release says.

Earlier this month, the National Company Law Tribunal (NCLT), Kolkata Bench had approved the proposed scheme of the demerger and the amalgamation. The scheme had been approved by the NCLT, Bengaluru Bench, on October 31, 2023.

Tata Coffee Limited (TCL), a subsidiary of Tata Consumer Products Limited (TCPL), is Asia’s largest integrated coffee company. Meanwhile, TCPL has presence in the food and beverages business in India and has a significant presence in many global markets including Canada, the U.S., the U.K., and Australia.

In March 2022, the board of TCPL had approved the merger of all businesses of TCL with itself as part of a reorganisation plan to unlock synergies and efficiencies. The plantation business of TCL will be demerged into TCPL's wholly-owned arm TBFL, while the remaining business of TCL, consisting of its extraction and branded coffee business, will be merged with TCPL.

As per the merger plan, shareholders of TCL (other than TCPL) will receive an aggregate of 3 equity shares of TCPL for every 10 equity shares held by them in TCL. This will be done by issuance of 1 equity share of TCPL for every 22 equity shares of TCL in consideration for the demerger. For the merger, 14 equity shares of TCPL will be issued for every 55 equity shares of TCL.

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