Tata Global Beverages will also rename itself after the deal with Tata Chemicals, with a formal announcement expected as early as this week. (Photographer: Dhiraj Singh/Bloomberg)

Tata Group Poised to Fold Food Businesses Into One Unit

(Bloomberg) --

Tata Global Beverages Ltd. is acquiring all the food brands from Tata Chemicals Ltd., as India’s biggest conglomerate streamlines its corporate structure.

Tata Global Beverages -- to be renamed as Tata Consumer Products Ltd. -- will issue 1.14 shares to the investors in Tata Chemicals, the company said in an exchange filing Wednesday. The beverage maker expects the restructuring, which will create a combined consumer firm with sales of nearly 91 billion rupees ($1.3 billion) and 11.5 billion rupees in operating profit, to close by June 2020, the filing said.

Tata Global Beverages had closed 0.5% lower in Mumbai, taking its decline this year to 9.2%. Tata Chemicals, which has slipped 21.2% this year, fell 3% while the benchmark S&P BSE Sensex had lost 0.6%. The announcement came after the close of India market hours.

The transaction, first reported by Bloomberg News last year, underpins group Chairman Natarajan Chandrasekaran’s resolve to simplify the coffee-to-cars conglomerate, which has more than 100 operating companies including Asia’s biggest software services firm and India’s largest automaker. Last year, the group said it will create a single entity called Tata Aerospace & Defence by merging all allied businesses.

The deal is subject to regulatory and court approvals, the filing said.

Tata Global Beverages, one of the biggest branded tea sellers in the world with Tetley and Tata Tea, will now add branded salt, spices and lentils to its portfolio. It also sells coffee under Eight O’Clock brand and bottled water. Tata Chemicals is the world’s third-largest producer of soda ash.

Chandrasekharan, in an interview to Bloomberg last year, said the 151-year-old group had gone into businesses that were once needed for nation building. But he said he now intended to whittle down this sprawl into 10 verticals, which would oversee all the group businesses.

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