INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

TATAS BUY EIGHT O'CLOCK COFFEE

  TATA Coffee, a 51%-owned subsidiary of Tata Tea, announced that it had acquired US-based Eight O' Clock Coffee Company (EOC) from Gryphon Investors for Rs 1,015 crore ($220 million). The acquisition, which will be financed through a combination of equity and non-recourse debt, is in line with Tata Coffee's plans to enter the US market.

“By the end of the decade, we expect the Tata Tea group, including Tata Tea, Tetley and Tata Coffee-Eight O' Clock Coffee combine, to become one of the largest and most admired beverage players in the world. This move is in line with the Tata Group's international strategy,” RK Krishna Kumar, chairman, Tata Coffee said in a statement. JP Morgan was the financial advisor to Tata Coffee in this acquisition while Rabo Bank is funding the deal, which was signed night. Tata Coffee shares rose 20% on BSE to Rs 325.65 in the course of a special trading session.

“This acquisition is a strategic fit with our growth plans and helps Tata Coffee in attaining its objective of becoming an international and fully integrated player in the coffee industry,” said MH Ashraff, MD, Tata Coffee.

EOC is the third largest coffee brand by volume behind Folgers and Maxwell House in the $21-billion (Rs 97,000-crore) US coffee market, and has approximately 67% of All Commodity Volume penetration of the US retail coffee market, according to a statement issued by Tata Coffee. Headquartered at Montvale , New Jersey , EOC operates its roasting and packaging facility in Landover , Maryland . In calendar year ‘05, EOC had net sales of $109 million (Rs 505 crore) and EBITDA of $27 million (Rs 125 crore). It has a 54% market share of the branded whole bean coffee market.