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Coke to acquire Glaceau for $4.1bn
Soft drink giant Coca-Cola on Friday announced it will acquire US energy drink maker Glaceau, in which India's Tata Group has 30 per cent stake.
Updated : Sep 14, 2017, 04:26 PM IST
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ATLANTA: Coca-Cola, the world's largest aerated drinks maker, on Friday announced an agreement to acquire US energy drink maker Glaceau, where India's Tata Group has 30 per cent stake, for 4.1 billion dollars in cash.
The city-based firm would buy 100 per cent of Energy Brands Inc, or Glaceau, a move that will expand its portfolio to vitaminwater, smart water, fruit water and energy brands and give it an edge over its closest rival PepsiCo.
The deal comes as a windfall for Tatas, which acquired 30 per cent stake in August last year for 677 million dollars. Coca-Cola's offer values Tatas stake at 1.2 billion dollars.
Separately, Tata Tea informed the Bombay Stock Exchange the group has agreed to sell its 30 per cent stake to Coca-Cola by the end of this year.
"The Board of both companies have approved the transaction," Coca-Cola said in a statement, adding the transaction is expected to close in the summer of this year.
"Glaceau and its brands provide us with highly attractive longer-term international opportunities," Coca-Cola President and Chief Operating Office Muhtar Kent said in the statement.
Coinciding with news of the deal, Tata Tea shares jumped 4 per cent or Rs 34.95 on the Bombay Stock Exchange today to Rs 913.65 after hitting a life-time high of Rs 941.25 earlier in the day.
Glaceau had a turnover of 355 million dollars. Tata Group had in August last year projected Glaceau's annual revenue to nearly double to 700 million dollars in 2007.
Based on the price of Tatas' acquisition, New York-based Glaceau was valued at close to 2.25 billion dollars.
Glaceau would operate as a separate business unit within Coca-Cola North America. Its top three executives J Darius Bikoff, Mike Repole and Mike Venuti intend to lead the business for at least three years, the Coke statement said.
The transaction is expected to add to Coke's earnings in the first full-year following completion of the deal.
Meanwhile, industry publication Beverage Digest on Friday quoted unnamed sources as saying the US Federal Trade Commission has begun talking to executives in the industry. Earlier this week, it had reported that Coca-Cola had filed a per-merger notification with the regulator.
The New York Times quoted Morgan Stanley analyst William Pecoriello as saying the acquisition could be a "potential game changer" in the market for non-carbonated drinks. Coca-Cola's major rival in this space is PepsiCo, which is run by India-born Indra Nooyi.
Glaceau was first reported to be on Coke's takeover radar earlier last month.
The reports had sent shares of Tata Tea soaring by close to 15 per cent on the Indian bourses on April 25. The stock gained over four per cent again on May 22, after the reports about the pre-merger filing made by Coke in the US.
