Tata Tea buys 33% in South Africa’s Joekels
The Rs 3,000-crore branded tea major, Tata Tea has acquired a 33% stake in the $5-m South African tea company, Joekels Tea Packers, through its subsidiary, Tetley Group, which has funded the acquisition.
ET was the first to report in its edition dated June 8, ’06 that Tata Tea is eyeing an acquisition in South Africa and the deal is likely to close in the next 3-4 months. The scrip rose marginally to Rs 737 on Thursday.
The deal will help Tata Tea leverage Joekels’ distribution network for its own brands, both home-grown and recently acquired, hence giving the company a toehold in the SA market. Joekels will have a licence to sell Tetley-branded products in SA, Nambia, Botswana, Lesotho and Swaziland and will produce these at their factory in SA.
Senior company officials had earlier indicated that the company is a relatively small player in the SA market, but with a good distribution system in place. Tata Tea declined to comment on the intricacies of the deal like the funding details, growth strategy and targeted market share in South Africa.
”This acquisition is yet another development in our plan to grow the Tata Group’s tea business around the world. It establishes a presence for Tetley in South Africa and some of its neighbouring countries,” said Ken Pringle, executive vice-chairman and chief executive offices, Tetley Group.
Joekels, founded in 1994, is the third-largest player in the South Africa with a 5% value share of the market. The company is owned and run by Jonathan Kelsey and Joe Swart and it manufactures and sells brands in the economy and mainstream tea segments. Its main brands are Phendula Tips and Rooibos Laager, the economy Tea Time range, Tea4Kidz, and San Aqua, which is a Rooibos Ice tea.
Tata Tea is on a global shopping spree, looking at acquiring green, herbal and fruit-based tea companies as well as soft drink ones in developed markets, as these are growing faster than normal or black tea. Some of the countries on Tata Tea’s radar are Russia, Poland, China, Bangladesh and Pakistan, among others.
The Joekels deal comes after a recent series of acquisitions. In August ’06, the company acquired a 30% stake in US-based flavoured water company, Glaceau for $677m, which is being funded through a mix of debt and equity.
Last year, Tata Tea acquired FMALI Herb and Good Earth Corporation through its US subsidiary —Tetley US Holdings — for $32m. Tata Tea’s buying of UK-based Tetley for $407m came in ’00 and the company is now looking at distributing Tetley in various untapped markets.
Tata Tea has widened focus from tea and coffee to various other options in the entire beverages category since the black tea market is not recording an upbeat growth rate globally.
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