Tata stake in energy brands can go up to 40 per cent
The Financial Express — September 2, 2006

Tata Tea, the beverages flagship from the Tata stable, sees its shareholding settling at around 40 per cent in US enhanced water company Energy Brands - better known for its brand Glaceau - eventually. Tata Group chairman Ratan Tata and Tata Tea vice-chairman RK Krishna Kumar would join the Energy Brands board at its next meeting, with Tata taking over as the Chairman. Tata Tea bought a 30-per cent stake in Energy Brands for a hefty $677 million late last month, in what was the largest overseas acquisition by a private sector Indian company. The deal values the company at $2.3 billion.

Krishna Kumar said Friday that the shareholders' agreement between Tata and Energy Brands envisaged the shareholding going up from the present 30 per cent to 40 per cent eventually. "This is where we see our shareholding eventually. At the moment, it's at 30 per cent," he said, adding that venture capital firms currently still hold 17 per cent in Energy Brands, and finding the additional stake to take the Tata holding up to 40 per cent in Energy Brands would not be difficult.

Krishna Kumar said the key brands of Glaceau, like Vitaminwater, Fruitwater and Smartwater, which have been gaining in popularity in the US, could be taken outside the US and brought into India only after two years. This is because, he said, the first task would be to help Glaceau to reach its true potential. "We don't see it as an issue of the US market or the Indian market. For us, it is a seamless global market and we will work together to help Glaceau reach its full potential as a company," Krishna Kumar said. "In the next ten years, Energy Brands will be a $3 billion dollar company," he added.

He added the beverages business of Tata Tea would be synergised with Energy Brands so that they could draw on each other. For instance, Tata Tea already has ready-to-drink tea, which if synergised with the Glaceau water brands, can be taken to a new level of success. He said other than the top end of the pyramid in India, there would also be a huge opportunity for enhanced water for the bottom end, where malnutrition among children and resultant diseases can be addressed. "These are some thoughts at this point. We will have to take them forward at a later stage," Krishna Kumar said.

J Darius Bikoff, founder of Glaceau, said there was a clear connect between his company and the Tata Group and that made the deal go through quickly. "It just felt right," he said, adding that the very high ethical standards of the Tatas also contributed to making the partnership possible.