Limited, a 51-per-cent-owned subsidiary of Tata Tea
Limited, has signed a definitive agreement to acquire
Eight O' Clock Coffee Company (EOC), USA from Gryphon
Investors for a total acquisition price of US$ 220 million
(Rs 1,015 crore).
EOC has over 100 years of brand history and retail coffee
experience in the US. It is the # 1 player in the branded
whole bean market and the category leader in the value
gourmet segment in the US retail market. Within the
broad US food category, EOC is the third largest coffee
brand by volume behind Folgers and Maxwell House. EOC
enjoys significant retail distribution strength with
approximately 67 per cent of all commodity volume penetration
of the US retail coffee market.
Headquartered in Montvale, New Jersey, EOC operates
its roasting and packaging facility in Landover, Maryland.
In calendar year 2005, EOC had net sales of US$ 109
million (Rs 505 crore) and EBITDA of US$ 27 million
(Rs 125 crore). The company has a very experienced management
team led by its chief executive officer Ms Barbara Roth
who has over 20 years of experience in the US consumer
EOC provides a sizable entry platform and an established
brand to Tata Coffee in the US$ 21 billion (Rs 97,000
crore) US coffee market. The acquisition, which will
be financed through a combination of equity and non-recourse
debt, will transform Tata Coffee from a regional coffee
player in the Indian market to a significant global
player with strong and powerful brands in the global
markets, including in the US. This acquisition is in
line with Tata Coffee's objective to move up the value
chain and become a leading and fully integrated player
in the global coffee industry.
The EOC acquisition is also in line with the vision
of the Tata Tea group to become a global beverage player.
It follows a string of acquisitions by the group in
various geographies including Tetley globally, Good
Earth in the US, and JEMCA in the Czech Republic. Following
this acquisition, the group will now have significant
scale in all important markets in Asia, Europe and North
J P Morgan acted as the exclusive financial advisor
to Tata Coffee on this acquisition.
The funding is being arranged by Rabo Bank.
Mr R K Krishna Kumar, chairman, Tata Coffee, said, "Tata
Tea is today one of the fastest growing beverage companies
in the world and by the end of the decade, we expect
the Tata Tea group, including Tata Tea, Tetley, Tata
Coffee and Eight O' Clock Coffee, to become one of the
largest and most admired beverage players in the world.
This move is fully in line with the Tata Group's international
Mr M H Ashraff, managing director, Tata Coffee, added,
"This acquisition is a strategic fit with our growth
plans and helps Tata Coffee in attaining its objective
to become an international and fully integrated player
in the coffee industry."
Ms Barbara Roth, chief executive officer, Eight O' Clock
Coffee, said, "We are very excited to be part of
the Tata Group. This transaction creates a beverage
player that is in a unique position to tap growth opportunities
in the huge coffee market in the US and globally. With
the backing of the Tata Group we will be able to leverage
our brand equity to capture new markets and new geographies."
For the year ended March 31, 2006, Tata Coffee recorded
a net turnover of Rs 190 crore (US$ 41 million) and
a net profit of Rs 22.6 crore (US$ 5 million). For the
same period, Tata Tea recorded consolidated sales of
Rs 3,240 crore (US$ 700 million) and a net profit of
Rs 305 crore (US$ 66 million).