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Tata Tea to set up arm in Europe for Tetley takeover

Rakesh Kumar Dubey in Calcutta

India's tea giant, Tata Tea Limited, will set up a new subsidiary in Europe to acquire major shareholding and management control in UK-based Tetley Limited.

Tata Tea sources said here today that the company will invest around 75 million sterling pounds for purchasing shares of the new subsidiary.

Sources further said the company plans to raise 100 million US dollars through issue of securities in order to finance the projects.

A resolution enabling the management to go ahead with the decision would be placed in the forthcoming annual general meeting of the company, sources added.

It was, however, not yet decided whether these 100 million US dollars would be raised from the domestic market or through Global Depository Receipts or American Depository Receipts, sources said.

Tetley Limited is a well-known UK-based international company having operations in Australia, Europe and Canada and the proposed acquisition is likely to consolidate Tata Tea's position as a leader in the global tea market.

About setting up of the new subsidiary, sources said depending on the final price at which the deal would be struck, the exact amount of investment in floating the company would be determined.

In order to facilitate the 100 million dollar issue, the company is planning to increase its authorised capital from Rs 500 million to Rs 750 million by the creation of 25 million equity shares of Rs 10 each ranking pari passu with the existing equity shares of the company in all respects, sources added.

Consequent amendment in its Articles of Association would also be made, he said.

Meanwhile, Tata Tea which reported a production of 60.7 million kg last fiscal and achieved a growth of about 17 per cent in packaged tea has decided that the vacancy on its board caused by retirement of Darbari Seth be not filled for the time being.

Seth, who was the chairman of the company till May 1995 and was retiring by rotation, has expressed his desire not to seek re-election, sources said.

UNI

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