Shares of Tata Coffee zoomed as much as 13 per cent in early trade on Wednesday after the announcement of its merger with Tata Consumer Products (TCPL).
Tata Consumer Products, the FMCG bluechip company, announced the merger of all businesses of Tata Coffee Ltd with itself as part of a reorganisation plan in line with its strategic priority of unlocking synergies and efficiencies.
“While the plantation business of Tata Coffee Ltd (TCL) will be demerged into TCPL’s wholly-owned arm TCPL Beverages & Foods Ltd (TBFL), the remaining business of TCL, consisting of its extraction and branded coffee business, will be merged with TCPL,” the company said in a statement.
Following the development, shares of Tata Coffee zoomed about 13 per cent to Rs 220.90 on Wednesday, before trading at Rs 215.5 at 10 am. The scrip settled at Rs 196.25 on Tuesday.
Tata Consumer Products advanced more than 5 per cent to Rs 782.50 on Wednesday. The Nifty50 constituent had settled at Rs 743.25 at Tuesday’s close.
BSE barometer Sensex was trading 486.28 points or 0.84 per cent higher at 58,429.93 at the time of writing this report.
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 (other than TCPL) 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.
Source: Economic Times