Tata tea to own 30% of Glaceau

India's Tata Tea Ltd., the world's second-largest branded tea firm has decided to invest $677 million to buy 30 percent of U.S based Energy Brands Inc., maker of Glaceau vitamine water.

The makers of vitamin water Glaceau announced that they have signed an agreement with Tata, whereby the Indian company will purchase the stake previously held by TSG Consumer Partners and provide additional growth capital. With this investment Tata will be the owner of 30 percent of Glaceau.

As the group seeks to diversify its products and enter new markets, the Tatas have spent more than $1.3 billion to acquire beverage companies overseas. Tata Tea bought U.K.'s Tetley brand and its subsidiary Tata Coffee bought the Eight O'clock Coffee Co. of the U.S.

This acquisition will be the largest-ever overseas equity investment made by a private Indian firm. Tata tea has stated that this venture is aimed at strengthening its place in the U.S. and expanding its beverage business globally.

R.K. Krishna Kumar, vice chairman of Tata Tea, said, “Glaceau is part of a very exciting, strong business and provides Tata Tea an opportunity to be present in the unfolding crossover space in the beverages market.”

This transaction is being made through Tata Tea GB Ltd., which includes Tetley Tea's operations worldwide.

“The really good news for our employees, distributors and retailers who are responsible for our success is that this partnership ensures our continued independence. We appreciate and value TSG Consumer Partners’ support for the Company and its management,” said Mike Repole, President of Glaceau.

The Tata group's revenue from the United States was almost 10 percent of its global revenue of $22 billion, amounting to a good about $2 billion.

The weak Mumbai market saw Tata tea shares end 2.2 percent lower at Rs. 827.90, before the announcement was made.