Tata Coffee Ltd. acquires US based Eight O'Clock Coffee Company

Tata Coffee Ltd, the largest Coffee Plantation Company in Asia, has signed a definitive agreement to acquire US based Eight O'Clock Coffee Company (EOC) from Gryphon Investors for a total acquisition price of USD 220 Million.

The company with 51% owned unit of Tata Tea Ltd, has acquired the popular US brand Eight O'Clock Coffee, in a move that accelerates the Bangalore-based company's move from the commodity end of the industry to higher-margin brands.

Eight O'Clock Coffee is the third largest coffee trademark by volume in USA behind Folgers and Maxwell House that enjoys significant retail distribution strength with approximately 67% of All Commodity Volume penetration of the US retail coffee market, the company stated on the Tata group website.

Tata Coffee said EOC, with ultimate sales of USD 109 Million for 2005 would be an entry ticket into the $21bn US coffee market. After the acquisition, the EOC becomes the latest foreign asset to fall into the hands of Tata, the acquisitive Mumbai-based steel to technology-services group that has made globalisation a strategic goal.

About the anticipation behind the deal, Tata Coffee Chairman R K Krishna said that "Tata Tea is today one of the fastest growing beverage companies in the world and by the end of the decade, we expect the group, including Tata Tea, Tata Coffee and EOC combine to become one of the largest and most admired beverage players in the world. This move is fully in line with the Tata Group's international strategy."

Tata Coffee declared the acquisition will be financed through a combination of equity and non-recourse debt. The latest acquisition follows a series of acquisitions by the Tata Tea group, including UK tea group Tetley and Good Earth.

Tata Coffee currently manages 23 estates extended over 7,000 hectares across the southern state of Karnataka, better recognized for its IT capital Bangalore, producing 10m kg of coffee a year. It is India's second-largest exporter of instant coffee.