deals
Time for tea
Insuring success
Wh at S NewS Issue 3 April/May 2000
In March, we gave you a brief preview
to the largest cross-border acquistion in
India - the Tata tea deal. Now, we're
ready to give you the full story. A signifi
cant international victory, Rabobank is
playing a central role in an agribusiness
deal that will reshape the global tea indus-
try - the far-reaching takeover by India's
Tata Tea group of Britain's Tetley Tea for
a total of USD 433 million. This is the
largest cross border acquisition in India's
corporate history to date, and it will place
the country and its newly acquired brand
on the global map in the tea industry.
Tetley, which invented the ubiquitous tea
bag, is the world's number two tea brand
selling over 20 billion tea bags per year.
Tata Tea forms part of the Tata industrial
group, with annual sales of USD 8 billion.
Tata's Chairman, Ratan Tata, described
the deal as 'a daring attempt to secure
global leadership for Indian tea' - one that
will bridge the historie gap between pro-
ducing and consurning nations. He addcd
that it was also 'a first step in our global-
ization'.
Rabobank India, the London branch, and
support in Utrecht delivered this impor
tant transaction, which captured business
press headlines worldwide. Rabobank was
appointed sole l.ead Arranger of the lever-
aged debt financing packagc. Working to-
gether, the Rabobank offices performed a
valuation of the business, coordinated the
4-month due diligence process on Tetley
both in the US and UK, and finally struc
tureel and underwrote the majority of the
acquisition finance package. This was a
prime case of how Rabobankers can
transform their expertise to direct value
for a cliënt. This deal has been uniquely
structured as a leveraged buyout. It in-
volves multiple tranches that creatively
address India's foreign stringent exchange
control mechanisms. They do so to effec-
tively enable Tata to acquire Tetley for
Sterling 264 million while using just Ster
ling 15 million in domestically-sourced
funds.
Advising, structuring, and providing a full
leveraged financing packagc on a non-rc-
course basis involved significant M&A
leveraged finance expertise being mobi-
lized from throughout the Rabobank net-
work. Bringing together pockets of
knowledge from throughout the global
network, we were able to deliver a world-
class package and facilitate this complex,
cross-border deal. This is the largest
M&A transaction in India's corporate his
tory, and it has cemented our ties with a
very important cliënt.
According to R.K. Krishna Kuntar, Tata's
Vice Chairman, 'Rabobank strategie and
financial advisory in the first phase, fol-
lowcd by a complete financing offer, has
been a key component in this significant
acquisition by the Tata Group. Wc are ex-
treniely pleased by the professional com-
mitment and dedication by Rabobank.'
Indeed, as a result of the Rabobank deal,
Tata will emerge as the world's number
two player in the tea industry after
Unilever. The acquisition will help it sub-
stantially boost exports in 2000 on a
briskcr world tea trading scene. 'Some
countries where consumption was show
ing a declining trend have stabilized.
Countries such as Iran, Iraq and Russia
who were out of the market for the past
few years, are also likely to corne back,'
Kumar said. Tata said his company
exported tea worth 700 million rupees in
1999, and 'this year, wc are hopeful that
we will be able to more than doublé our
exports. We will use the Tetley brand in
different product categories,' he said.
The deal will give Tata access to
significant global expertise, position the
group further up the value chain, and
provide an opportunity to tap high-
growth sectors like nutriceuticals, herbal,
and flavoured teas.
In Japan, Rl has successfully completed
its first ever M&A transaction. As the
cxclusive financial advisor to Taisho Life
Insurance Company Ltd., which was in
Top players in Tokyo: back - Mari Toda (left),
Sameer Sudame, Nobuyuki Mokkoh. Front -
Hiroshi Fujita (left), Mikio Fuchiki, and Mike
Qordon
search of a buyer, Rl was instrumental in
advising the sale of a controlling interest
in Taisho to Claremont Capital Holdings
Inc., a Japanese finan
cial service holding
company, by way of a
share placement and the
right to invest a further
Yen 10 billion in Taisho
over the next year. In
addition to the Share
Placement, Rl helped
the Company raise ad-
ditional capital from
eight othcr investors, thereby allowing it
to increase its capital by Yen 5 billion and
improve its solvency margin ratio to
240%. This is a significant transaction for
Rl and a clear demonstration of the suc-
cessful collaboration between our M&A
team in North East Asia and the Rabo Se-
curities Asia capital markets professionals,
who also recently assisted Taisho unlock
unrcalized gains in its debt portfolio. Last
year, our Tokyo office completed the secu-
ritization of Taisho's head office in
Key drivers from Fiong Kong's
corporate finance: May Wong Tung
(left) and Jonathan Chau
Hibiya. Rabobank was
engaged as the Com-
pany's exclusive financial
advisor as a result of
Rabo Securities Asia's
strong relationship and
successful track record
with the Company. In a
recent letter to our office
in Tokyo, the President
of Taisho thanked Rl for
its role in continuing to assist in its
restructuring efforts. The success of this
transaction was made possible through a
coordinated effort between Rl's Hong
Kong Corporate Finance and Rabo Asia
Securities. The Tokyo deal team was led
by Hiroshi Fujita and Nobuyuki Mokkoh,
in cooperation with members of
Hong Kong's corporate finance team.
Additional assistance was provided by
Ryoko Furukawa, Irwin Chung and
Anthony Trayhurn.
