Tata Consumer Products announced on Friday that its board of directors has considered and approved a fundraising initiative of up to INR 6,500 crore. According to a regulatory filing, the company plans to raise funds through the issuance and allotment of Commercial Papers, capped at INR 3,500 crore. Additionally, the approval includes the raising of funds by issuing equity shares with a face value of INR 1 each through a rights issue, not to exceed INR 3,000 crore.
“For the purposes of giving effect to the rights issue, the detailed terms to the rights issue including but not limited to issue price, rights entitlement ratio, record date, timing and terms of payment will be determined in due course by the Board, or the ‘Capital Raising Committee’ constituted by the Board, in accordance with applicable laws, subject to receipt of necessary approvals, as may be required,” it said in the exchange filing.
Tata Consumer Products said that the funds totaling INR 3,500 crore are earmarked for bridge financing, aimed at facilitating the payment of consideration for the proposed acquisition of stakes in Capital Foods Private Limited and Organic India Private Limited.
Continue Exploring: Tata Consumer Products to fund Capital Foods and Organic India deals with cash reserves, bridge financing
Earlier on January 12, Tata Consumer Products announced the signing of definitive agreements to acquire 100 percent equity shares of Capital Foods, the owner of well-known brands ‘Ching’s Secret’ and ‘Smith & Jones,’ in a phased manner. The initial acquisition will include 75 percent of the equity shareholding, with the remaining 25 percent to be acquired over the next three years. This strategic announcement is geared towards expanding Tata Consumer Products’ product portfolio and fortifying its pantry platform. The estimated overall size of the categories in which Capital Foods operates is INR 21,400 crore.
Continue Exploring: Tata Consumer Products set to expand portfolio with strategic acquisitions of Capital Foods and Organic India
Sunil D’Souza, MD & CEO, Tata Consumer Products, had said, “We believe this is a good strategic and financial fit. It will open up significant market opportunities in the fast-growing non-Indian cuisines segment, leveraging the sales and distribution platform that we have built. The strong brand recall of Ching’s Secret and Smith & Jones coupled with our operational strength across channels makes us extremely confident of driving topline growth and realizing cost synergies. This transaction will accelerate momentum in our business and is margin accretive to our business.”
On the same date, Tata Consumer Products also announced that it had entered into definitive agreements to acquire up to 100% of the issued equity share capital of Organic India. This strategic move is in line with Tata Consumer’s overarching goal of expanding its product portfolio and increasing its presence in rapidly growing and high-margin sectors. The acquisition is set to establish a Health & Wellness platform for Tata Consumer Products. Notably, the Total Addressable Market for the categories in which Organic India operates is valued at INR 7,000 crore in India and INR 75,000 crore in international markets, where Tata Consumer already boasts a strong foothold.