Indian companies are becoming more and more matured in the international stage. One indication of this maturity if the fact that more and more Indian companies are trying to acquire European and US companies. Recently, Tata Coffee Limited came up with a statement that announced their acquisition of the Eight O’ Clock (EOC), a US based coffee company, from Gryphon Investors. The total deal was worth US$220 million. I am quoting from the report published in India e News.com
“According to Tata Coffee statement here, the acquisition, to be financed through equity and debt, will transform the Indian company from a regional player to a global player.
‘The acquisition is in line with our objective to move up the value chain and become a leading integrated beverage player in the global coffee industry,’ the statement said.
The company, however, did not give the break-up of the debt-equity portion of the deal.”
Tata Coffee Limited (TCL), a subsidiary of the Tata Tea Limited, has been operating since 1952 but got its major breakthrough in 1993. According to the report published in the India eNews.com, in the fiscal year 2005-06, TCL made Rs. 221 million net profit.
On the other hand, Eight O’ clock is more than one hundred years old and one of major coffee retail firms of USA. It is the third largest company by volume. In 2005, EOC had $109 million net sales. The company’s headquarter is situated in Montvale, New Jersey. American coffee market is a multi billion dollar industry. So, it will be interesting for us to observe how Tata Coffee Limited uses this acquisition to perform better in USA market.
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