Equity Watch

Tata Coffee's US$220 million buyout of Eight O'Clock Coffee

Tata Coffee’s leveraged buy-out of the US based Eight O’Clock Coffee (EOC ) from Gryphon Investors for US$ 220 million, is by  now  known to  all investors. What is probably not known is that Tata Coffee recently floated “Alliance Coffee Ltd ” a marketing JV company with Beeyu Overseas Ltd.  Beeyu overseas will hold 49% of Alliance Coffee’s Rs. 8 crore equity.Beeyu is listed on BSE and is available at Rs. 10. I strongly recommend a BUY on Beeyu for the following reasons:

  • Beeyu came out with a public issue last year @Rs. 14 per share and the issue was over-subscribed 12 times.
  • Beeyu has un-interrupted record for paying dividend since inception. Max. being 50% in 1998-99.
  • Beeyu has a BV of Rs. 20
  • Beeyu is the largest producer of tea in TN with biggest factory at one location to process 9000 TPA.
  • Alliance Coffee is expected to have revenues in excess of Rs. 100 crores with marketing margins of 20-25%. Dividend income of Rs. 4 crores is  expected as other income in Beeyu’s  account. This should give a boost to Beeyu’s EPS.
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