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The BBC's Jeremy Ball
"A coals-to-Newcastle takeover"
 real 28k

Sunday, 27 February, 2000, 11:25 GMT
Tetley bagged by India's Tata
queen takes tea
Tea - still the nation's favourite drink
Tetley Tea, inventor of the teabag and maker of the traditional English cuppa, is being bought by Tata Tea of India.

The deal to buy the world's second largest producer of tea bags is worth 271m and is the biggest acquisition in Indian corporate history.

tetley teafolk
Tetley is famous for its teafolk
The purchase of the Tetley business, which is twice the size of Tata Tea, represents the largest cross-border takeover of an international brand by an Indian firm.

Under the terms of the agreement, signed on Saturday night, Tata Tea will make a formal offer for Tetley via its subsidiary in the UK.

Tata group chairman Ratan Tata said it was a momentous occasion for the company and a bold move which he hoped other Indian companies would follow.

The company said there would be "no implications on jobs at all."

Access to Europe

Tetley, best known for round tea bags and a cartoon advertisement featuring Tetley Tea Folk, is being sold by Schroder Ventures and PPM Ventures, which acquired control of the company in a management buy-out from Allied Domecq.

The Tetley brand and tea-bag technology will provide Tata with access to European markets for its tea production.

Tata beat competing interest from Sara Lee, the American owner of Wonderbra and Nestle, the Swiss food company which owns Nescafe.

Tetley abandoned plans for a flotation in 1998 after failing to attract a satisfactory price.

Shrinking market

The 160-year-old company has suffered from a rapidly shrinking UK market and stiff competition from its rival, Brooke Bond.

dunkin biscuit in tea
Young people are turning increasingly to coffee
Despite the fact that Britons drink an average of 1,016 cups of tea a year, against 204 cups of coffee, the market is shrinking fast.

Younger people are increasingly opting for coffee or coke over tea.

This led to a fall in Tetley's pretax profits to 4.98m in the year to March 1999, compared with 35.7m in the previous year.

Joint venture

Tetley and Tata have already worked closely together.

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.

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.

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See also:

28 Feb 00 |  Business
India toasts tea takeover
28 Aug 99 |  The Company File
Indian tea firm looks to bag Tetley
15 Jun 98 |  The Company File
Tea float goes soggy
29 Jun 98 |  The Economy
Storm in a teacup
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