ACI to sell Tetley shares to Tata Consumer

ACI Limited, a publicly traded leading business conglomerate, has agreed to sell its entire stake in Tetley ACI Bangladesh Ltd (TABL) to Tata Consumer Products (TCP).

TABL, a tea company, is a joint venture of local giant ACI Limited and the India-based firm Tata Consumer Products (TCP) where the two partners own a 50 per cent holding each.

The board of directors of ACI decided on Saturday to sell its holding worth Tk 10.61 crore to Tata, according to a filing posted on the website of the Dhaka Stock Exchange (DSE) on Sunday.

To this end, the two parent companies of TABL are expected to sign a settlement agreement to complete the ownership handover process.

The two companies formed the tea company – Tetley ACI (Bangladesh) Limited –under a joint venture agreement in 2002.

TCP offered to buy ACI’s entire stake in TABL at Tk 32 per share. ACI Limited holds a total of 3,250,000 shares at TABL. 

Tata Consumer Products wants to acquire this stake as part of its long-term plan in the tea business.

Tata was targeting to fully takeover of TABL at a time when the growing domestic consumption created a boon for the tea businesses in Bangladesh.

The share transfer process, as per the DSE disclosure, would get finalized soon.

TABL currently operates two leading tea brands in Bangladesh— Tata Tea, and Tetley.

TCP and ACI reached an amicable agreement, subject to finalising a draft settlement agreement and signing the same, concerning such an offer, the DSE filing read.

The ACI’s board approved a draft of such a settlement agreement in connection with such a share sale and the termination of the joint venture agreement.

TABL faced a severe sales disruption in the fiscal year 2020-21 due to the Covid-19 restrictions, according to the latest annual financial report of ACI Limited.

The company, however, continues to provide high-quality tea blends through its global tea sourcing and blending expertise.

The ongoing macroeconomic strains cast a shadow over ACI Limited, a parent company of TABL, as the company posted a net loss of Tk 18.6 crore in the first quarter (July-September) of the fiscal year 2022-23.

The listed giant company had registered Tk 30.12 crore in net profit in July-September of the previous fiscal year.

This year-on-year shock in earnings refers to that the company had faced a massive blow to its business progress in the latest quarter.

A sharp increase in import costs caused by the taka’s steep depreciation against the US dollar resulted in a decline in its consolidated profit in July-September this fiscal, sources at ACI Limited said.

The business group, however, achieved significant revenue growth in Q1 of the current fiscal (FY23), thanks to booming sales in some corporate segments, according to a previously issued DSE filing.

Its consolidated earnings per share (EPS) also dropped because of the fall in its consolidated profit. The company, founded in 1973, operates in the pharmaceuticals, consumer brands, agribusiness, and retail chains sectors.

The conglomerate is involved in the manufacturing and marketing of drugs, consumer goods, and animal healthcare products. It also markets fertilizer, seeds, and other agro-related items.

ACI Logistics Limited, or chain super shop brand Swapno, is a subsidiary of ACI Limited, which is also the largest retail chain in the country.

ACI Limited’s consolidated per share loss stood at Tk 3.94 for July-September of FY23 against the earnings per share (EPS) of Tk 3.42 for the first quarter last fiscal.

Its consolidated net operating cash flow per share (NOCFPS) stood at negative Tk 85.45 for July-September of FY23 versus negative Tk 15.81 for the same period of FY22.

The publicly traded company’s consolidated net asset value (NAV) per share was reported as Tk 137.6 as on September 2022 which was Tk 141.98 at the end of June this year.

Despite volatility in operating and production costs, ACI Limited’s consolidated earnings per share increased by 9 percent in FY22 compared to the previous fiscal year.

The company’s annual earnings per share stood at Tk 5.23 in FY22 from Tk4.78 in the previous fiscal.

The board of directors of the company recommended a 50 per cent cash and 5 per cent stock dividend for FY22, against 65 per cent cash and 15 per cent stock for the previous fiscal.

 ACI shares were traded at Tk260.2 per share on the DSE trading floor on Sunday.