Tata Tea Blog

Friday, September 07, 2007

Tata Tea Mulling $2B Acquisition of AriZona Beverages

India’s Tata Group is eyeing possible acquisition targets in the beverage market in the U.S., primarily AriZona Beverages, best known for its iced tea, according to media reports here.

The Tatas have been interested in AriZona Beverages for three years now, The Economic Times of Mumbai said in a report quoting unnamed sources. Company officials did not comment on the rumors.

Long Island-based AriZona began as a beer distributor in New York’s market in 1971. The company diversified into its well-known tea brands only in 1992. Its product line now includes juices and carbonated drinks. Tata Tea is looking at a possible buyout offer of $2 billion for the U.S. business.

The Tatas were also reportedly part of a consortium led by the Blackstone Group that was eyeing Cadbury Schweppes’s beverage business in North America, estimated at around $16 billion. But Cadbury said last month that it was extending the transaction because of volatility in debt markets. The Tatas were keen on a stake in Cadbury’s popular Snapple brand that would extend their portfolio in the U.S. market.

Last August, Tata Tea picked up a 30% stake in vitamin water brand Glaceau. But it sold the stake to Coca-Cola for $1.26 billion when Coke acquired Glaceau’s parent Energy Brands in May.

At the time, Tata Tea Vice Chairman R. K. Krishna Kumar said the company was keen on aggressively expanding in the U.S. markets and would build up a beverage brand there through inorganic growth. Officials said they were keen on 100% acquisitions, as is the company’s habitual preference, the Glaceau stake notwithstanding.

At present, revenues from the tea business account for 86% of the company’s turnover. Britain’s Tetley Group, the second largest bagged tea brand globally, is also a subsidiary of Tata Tea.

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