Shares of Tata Consumer Products (TCPL) and Tata Coffee (TCL) surged in the early morning trade on Wednesday after TCPL on Tuesday announced the merger of all businesses of TCL with itself as part of a reorganisation plan.
The TCPL stock climbed 5.28 per cent to Rs 782.50 per share on the BSE while on the National Stock Exchange (NSE), it rallied 5.32 per cent to Rs 782.75. Similarly, the shares of TCL jumped 13.07 per cent to Rs 221.90 on NSE and 12.92 per cent to Rs 221.60.
TCPL in an exchange filing late Tuesday informed that the plantation business of TCL will be demerged into TCPL’s wholly-owned arm TCPL Beverages & Foods, the remaining business of TCL, consisting of its extraction and branded coffee business, will be merged with TCPL.
The demerger to happen as the first step and the merger to happen as the immediate second step, both being proposed through a composite scheme of arrangement.
Under the scheme, shareholders of TCL will receive an aggregate of 3 equity shares of TCPL for every 10 equity shares held by them in TCL. This will be carried out through the 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, it added.
“This will enable the consolidation and 100% ownership of the branded, extractions & plantations business of TCL into TCPL and its wholly-owned subsidiary,” it said.
The Boards of Directors of TCPL and TCL, at their respective meetings held on Tuesday, have approved the combination of the plantation business of TCL with TBFL.
“The transactions will result in TCPL having 100% ownership of the business of TCL and of TCP UK, which will be an enabler for efficient reorganisation initiatives of its international business,” it said.
As on December 2021, TCPL holds a 57.48 per cent stake in TCL.