Submitted by: Submitted by hemenp
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Category: Business and Industry
Date Submitted: 02/21/2011 12:19 PM
2010
Tata Tea Ltd and Tetley Group
This report summarizes the Leveraged Buy-out (LBO) of Tetley by Tata Tea in 2000. The report highlights the objective of LBO and discusses in great length the structure of LBO adopted by Tata Tea.
Subject : Mergers and Acquisitions Submitted to : Prof Bhatia
MMS Finance 2009-2011 Group Members:
Shakti Agrawal (101) Ronak Mehta (131) Hemen Parekh (136) Bhaumik Shah (142) Bhavik Shah (143) Nimit Shah (149) Paawan Shah (151)
1. Introduction
a. Tea in India
India had over 400,000 hectares under cultivation and exported more than 14 percent of the world’s tea. The plantations ranged from low-grown areas (sea level up to 2000 ft) to highgrown (more than 4000 ft). Generally plucked from March to October, each area produced teas of distinctive character. Tea came in staggering variety of tastes, colors and flavors. The three main tea-growing areas in India were Assam, Darjeeling, and Nilgiri. Though traditionally a substantial portion of India’s tea was exported, the collapse of the USSR, India’s biggest customer, exposed India’s relative inefficiencies vis-à-vis producers in Sri Lanka and Kenya, whose tea gardens were much newer, used newer technology, and had higher yields. Indian companies were, however, somewhat insulated, thanks to faster-growing domestic consumption. Currently, domestic consumption of tea in India outpaced production growth, and it was projected that India would soon become a net importer of tea. Of the total Indian tea market, branded packaged teas accounted for 33-35 percent by volume. Hindustan Lever (HLL), now HUL was the market leader with around 43-45 percent market share, while Tata Tea was the second largest with around 17-18 percent market share. Apart from these two players, the market was extremely fragmented with many smaller/regional players. b.
History:
I. Tata Tea Ltd:
Tata Tea Ltd. traced its origins to the tea company, James Finlay. In 1964, James Finlay entered into a joint...