After making a killing last week in the Glaceau stake sale, Tata Tea is again in the news, this time for buying out Mount Everest mineral water. according to reports, Tata Tea may buy 11% stake from the promoters and make an open offer at Rs. 145-150 per share, valuing the company at over Rs. 500 crores. Tata Tea would spend Rs. 250 crore on the stake buy.
The promoters will make a preferential allotment to Tata Tea. MEMW is now owned by a group of NRI investors who bought the company from the Dadi Group. It manufactures natural mineral water under the brand ‘Himalayan’, and holds a 70% share in the niche mineral water segment and also has one of Asia’s largest natural mineral water plants. Other two prominent players in natural mineral water are ‘Evian’ from France and Catch. Other mineral water players like Aquafina, Kinley, Bisleri are packaged after being treated in plants.
The reason Himalayan got itself such a high premium is because the brand is positioned in the premium segment of the market as its 1 liter bottle is priced between Rs. 20-22. It portrays itself as a brand with health benefits and clientele includes airlines, restaurants, hotels and high-end homes. The company has also a tieup with ‘Marsh Supermarkets’ in USA, supplying to various superstores and pharmacies there
Other players like French company Group Danone (in news for its tussle with Britannia over ‘Tiger’ trademark), Coca-Cola, Pepsi, Nestle and Amul were also in the fray for Himalayan as every company wants to concentrate on health beverages but owing to valuation and strategic fits did not complete the due diligence process.
The Indian bottled water industry is valued at Rs. 1,500 crores, growing at a health 40% and expected to reach Rs. 5,000 crores by 2010. Thus this acquisition make strategic sense for Tata Tea as it strengthens its product portfolio and distribution, giving leadership position in mineral water. The Tata group was already in FMCG business through Tata Tea and Tata Coffee, catering to groceries and supermarkets and now it can tap the potential of airlines, hotels, clubs, bars and lounges. It seems Himalayan would certainly quench the thirst for Tata.
Find this article at: http://www.labnol.org/india/corporate/tata-tea-scales-the-peak-to-buy-mount-everest-mineral-water/169/
Tags: bisleri, coke, glaceau, himalayan, mineral water, mount everest, tata tea, Corporate, India
Reader Comments
there is also news on the market that they might give good dividend and think its due of its results today or tommorow
Written by ganesh on 05.31.07
If the news is true, then the Dividend Yield of Tata Tea could be as high as 20%
Written by Anurag on 05.31.07
So they are going to Bring fress water from mt. everest?
Written by dzibeads on 06.03.07