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Friday, August 27, 1999 Published at 13:44 GMT 14:44 UK

Business: The Company File

Indian tea firm looks to bag Tetley

The Tetley Tea Folk could swap Yorkshire for India

Tetley, the world's second largest tea company, is the target of a buy-out by an Indian tea producer.

Tata Tea, based in Calcutta, said in its annual report that it was "seriously examining" the purchase of Tetley.

The firm's board has approved submission of a bid for Tetley.

Last year, Tetley withdrew plans to float on the London Stock Exchange when management became concerned about the price it would fetch.

The move sparked rumours that it was expecting a future takeover bid.

Tetley saw its sales rocket when it produced first the round, and then the pyramid tea bag.

It is the market leader in the UK and Canada, with total sales of 300m and profits of 40m.

Bidding war

Tata may have to enter a bidding war with US company Sara Lee, which has also expressed an interest in the company.

Tetley was sold by drinks giant Allied Domecq for 190m to its management in 1995.

It is now estimated to be worth between 270m and 300m.

The company is the world's second biggest producer of tea bags and has been closely involved with Tata.

Joint venture

The two firms set up the Tata Tetley joint venture in Cochin, India, in 1992, to produce tea bags for the eastern European and Middle Eastern markets.

A spokeswoman for Tetley said: "We do receive offers from time to time and, as always, we continue to review them in the light of the business."

Tata Tea said its finance director would comment on the move next week.

Tata Tea is part of the giant Tata conglomerate which has interests in steel production, transport, hotels and computer software.

Tata Tea has estates in four states West Bengal, Assam, Kerala and Tamil Nadu and owns close to 60 tea estates covering 30,000 hectares of cultivated land.

Brooke Bond-Lipton, a subsidiary of food giant Unilever, is the world's largest tea company, with substantial interests in India through Hindustan Lever.

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