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Tata Coffee acquires US company for $220 mn

June 25, 2006

The Tata Group on Sunday announced the acquisition of a US-based company for $220 million.

"Tata Coffee has acquired the US-based Eight O'Clock Company," a group spokesperson said.

The company informed the Bombay Stock Exchange that it has signed a definitive agreement to acquire the Eight 0'Clock Coffee Company (EOC), USA, from Gryphon Investors for a total acquisition price of $220 million.

EOC has over 100 years of brand history and retail coffee experience in the US and is a leading player in the branded whole bean segment and a category leader in the value gourmet segment in the US retail market.

Within the broad US retail coffee category, EOC is the third largest brand by volume behind Folgers and Maxwell House, the statement said.

EOC had net sales of $109 million and EBITDA of $27 million in 2005.

The acquisition provides a sizeable entry platform and an established brand to Tata Coffee in the $21 billion US coffee market, the company said.

I found this article via Ivan on the Starbucks board, hopefully he doesn't mind me posting it here. ;)

The overall Tata Corporation is an amazing company, all of their segments are very well run as far as I can see. At the end of the above article, it says this is the latest move from Tata Coffee to become the leading player in the global coffee industry. I think they are a company that can become a world leader with coffee, but the question is whether or not they can successfully manage companies all over the world. Again, I think if any company can do it it is Tata Coffee. It will be interesting to see how Indian companies as a whole expand into international markets. For instance, Tata Motors owns 21% of Spanish bus and coach manufacturer Hispano Carrocera. Tata Motors also bought a South Korean truck manufacturer, Daewoo Commercial Vehicle, in 2004. You can expand either by buying international companies or expanding your own brand into other countries. It really depends on how cooperative countries are, because many countries don't like having foreign companies and brands coming into to their country. It also depends a large amount on whether or not your product is unique enough to expand into many different markets and conditions.

As always, it will be interesting to watch.


David K
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