Tata Global Beverages Ltd has said that it would merge Mount Everest Mineral Water with itself in a ratio of three shares of TGBL for every four shares of Mount Everest.
This is the first merger within the Tata Group after Cyrus P. Mistry took charge of the conglomerate.
Stocks dip
Following the purchase of the residual stake of 4.98 per cent from the original promoters (Venod Sethi) and paving the way for their exit, Tata Global Beverages had raised its stake in Mount Everest Mineral Water to 50.24 per cent. Mount Everest Mineral Water is the country’s only internationally present mineral water company.
However, investors gave the thumbs down to both the stocks on the bourses. According to analysts, Tata Global Q2 numbers did not meet market expectations. The merger plan too, did not go well with them.
According to Janardhan Kothari, a market strategist, the price of a staggered acquisition (from 2007 to 2013) of Mount Everest by Tata Global from the erstwhile promoters was predetermined at Rs 198 a share. It also subsequently acquired Mount Everest shares from the market for up to Rs 150 apiece.
According to the FY2013 annual report, as on March 31, Tata Global held 1.7 crore shares in Mount Everest at an average price of Rs 144.64 each. The valuation has been done by independent agencies SSPA and Haribhakti.
Fair deal
According to J.N. Gupta of proxy advisory firm SES, the merger ratio is a fair deal for the minority shareholders of Mount Everest. “Going by the comparative book values, PE ratios and market capitalisations, the shareholders of Mount Everest should be on the gaining side,” he added.
The Rs 10 face value stock of Mount Everest on Wednesday closed 9 per cent down at Rs 104.05 on the BSE. The Re 1 face value Tata Global stock dropped 6.63 per cent at Rs 144.40.