Tatas ink biggest overseas acquisition

New Delhi: In the biggest ever overseas acquisition by an Indian company, Tata Tea and Tata Sons, have bought 30 per cent in US based Glaceau Water Products for $677 million.

Tata Tea will invest $192 million and Tata Sons will invest $58 million through equity in Tata Tea GB, which owns the Tetley Group in Britain.

Energy Brands is the parent company of Glaceau Water Company, which sells water, FruitWater, VitaminWater, SmartWater. Glaceau Water Products are sold in 40 US states.

The rest of the investment will be raised through debt by Tata Tea GB and Tetley. The transaction is on a debt:equity ratio of 2:1. The Tata Group will have two directors on Glaceau's board.

This deal beats Dr Reddy's Betapharm acquisition for $570 million. The two Tata companies bought the stake from private equity firm TSG Consumer Partners. Glaceau sells 5 million bottles of water a day in the US and distributes ready-to-drink coffees from America's Best Brew.

"$355 million is the estimated turnover of Glaceau this year. It has grown more than 100 per cent from last year. It is expected to grow to about $700 million next year," said Krishna Kumar, Vice Chairman, Tata Tea.

The Glaceau management believes the value unlocking from this acquisition might push the company's valuation to $10.2 billion in three to five years. Glaceau also plans to go public.

"Our vision is to continue to build Glaceau, as the iconic brand of the health and wellness revolution," said J Darius Bikoff, Founder & CEO, Glaceau.

The acquisition is in line with Tata Tea's plans to reach turnover of Rs 7,000 crore in the next three years. That's more than twice its turnover. Tata Tea has made several acquisitions since it acquired Tetley in 2000. It then bought US based Good Earth Teas and Czech based Jemca. Tata Tea hopes Wednesday's deal will put it in the crossover space in the beverages market.

Meanwhile, there has been news about another possible acquisition by the Tata Group. One of its group companies, Taco, a car component maker, is in talks to make a global acquisition.

When contacted, a Taco spokesperson declined to comment, but confirmed that Taco was interested in international acquisitions as part of its growth strategy.