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Khaitans acquire Magors' tea gardens for Rs 170 cr

Our Bureau

Kolkata , June 6

THE Khaitans today announced that they had bought the 17 Assam tea gardens of the London-based Magors, their earlier partners, for approximately Rs 170 crore.

With this development, the Khaitans are slated to become the world's largest bulk tea producer with an annual production of 62 million kg. At present, they own 23 gardens in Assam and five more in Dooars through McLeod Russel India Ltd (MRIL).

In India, the Magors ran their business through Williamson Tea Assam Ltd (WTA). This company was earlier known as George Williamson (Assam) Ltd and it was created in 2001 when the Magors and the Khaitans split their businesses.

According to Mr Deepak Khaitan, Vice-Chairman of MRIL, the agreement was signed today in London after two weeks of negotiations. MRIL would buy 100 per cent of Borelli Tea Holdings Ltd, UK, from Williamson Tea Holdings plc, London, which in turn holds 70 per cent of Williamson Tea Assam.

The total cost of the acquisition has been worked out at GBP 21.35 million or Rs 168.66 crore. The Khaitans would be paying Rs 170 per share for WTA to the Magors. It includes a non-competition fee in the Indian tea market of Rs 30 per share.

Addressing the media through a tele-conference from London, Mr Khaitan said, subsequent to the takeover, MRIL would make a 20 per cent open offer for the minority shareholders.

When queried whether WTA would be delisted or merged with MRIL, he said: "Everything depends on the response to the open offer. There are several options and we have not finalised on it."

ICICI Securities is MRIL's advisor for this deal. According to Mr Khaitan, the deal would be funded through internal accruals and an ECB (external commercial borrowing). He, however, preferred not to give the details of the funding mechanism.

According to Mr Khaitan, the Magors would continue to have a presence in the WTA board as long as they wish to.

The Magors have tea estates in Kenya too through Williamson Tea Kenya Ltd and its annual production is 14.5 million kg. Mr Philip Magor said he is open to joining hands with the Khaitans for expanding their Kenyan tea business.

Recently two other tea majors, the Levers and Tata Tea, have exited from plantation business. Despite this trend, Mr Khaitan said they are open to further acquisition of tea gardens both in the country and abroad.

"We have the expertise in running tea plantations. We have been doing it for years. We know how to run bulk tea business profitably. So, we would like to expand this business further," he said.

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