Tatas weighing options in Glaceau play

MUMBAI: The Tata group is weighing options before taking any decision on its 30% equity holding in vitamin water maker Glaceau, after soft drinks major Coca-Cola expressed its intention to acquire Glaceau.

Senior sources close to the group told ET they were currently reviewing the situation and had not yet taken a decision. Coca-Cola on Monday filed a premerger notification with US anti-trust regulators about a proposal to acquire the US-based Glaceau as such a move could have an impact on the beverages sector.

As Coca-Cola is the world’s largest beverage company, a possible acquisition of Glaceau could reduce competition or lead to higher prices. Coca-Cola filed the notification under the Hart-Scott-Rodino provision of the US Federal Trade Commission which provides guidelines on competition and monopoly in different sectors and also ensures that such corporate moves don’t lower the quality of goods and services.

Last year, the Tata group, through Tata Tea, had bought 30% in Glaceau for $667 million, valuing the water maker at about $2 billion or approximately six times its earnings. The salt-to-software group, which is also India’s second largest conglomerate by revenue, had said its stake in Glaceau would provide global opportunities in the beverage business, apart from giving it a share in the highly-competitive US market.

Tata Tea already has a presence in the global tea market through the UK-based Tetley, which it acquired in 2001 for £271 million, then considered the largest overseas acquisition by an Indian company. This was in 2007 trounced by another group company, Tata Steel, which bought Anglo-Dutch Corus for $12.1 billion.

Tata Tea bought its 30% in Glaceau through Tata Tea GB, which includes Tetley Tea’s operations worldwide. The chairman of the company was to be initially nominated by the Tata group. The buzz about Tata Tea has been around for some time, that Coca-Cola could likely offer a premium to Tata Tea for the Indian company’s stake in Glaceau.

Shares of Tata Tea, which surged 4.4% to Rs 877.55 on Tuesday on the BSE, have been rising steadily after market talk that Coca-Cola’s bid values Glaceau at over $3 billion. Tata Tea has risen 29.5% in the past one month on the BSE.