Coca-Cola’s interest in US firm boosts Tata Tea scrip

Beverages giant Coca-Cola plans to acquire US energy drink firm Glaceau, in which Tata Tea has 30 per cent stake, in a deal that could be worth over $3 billion, US media reports said today. Reports in The Wall Street Journal as well as two industry publications — Beverage Digest and Beverage Business Insights — quoted unnamed sources as saying that the world’s largest soft drink maker is in serious negotiations to acquire part or all of Glaceau.

The reports sent shares of Tata Tea, which had bought the 30 per cent stake for $677 million in August last year, soaring by close to 15 per cent on the Indian bourses. Tata Tea shares closed at Rs 773.35 on the (BSE), 14.8 per cent over the previous close of Rs 673.70.

Based on the price of Tatas’ acquisition, Whitestone, New York-based Glaceau could be valued at close to $2.25 billion.

Although it was not clear whether Coca-Cola was looking to acquire Tatas’ stake or not, brokers said that the sharp rally in Tata Tea’s shares today was triggered by expectations that the company could reap huge premium on its stake in Glaceau if the US giant decides to acquire 100 per cent of the North American energy drink maker.