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Company bought from venture capital fund Gryphon Investors for Rs. 1,015 crore Company bought from venture capital fund Gryphon Investors for Rs. 1,015 crore

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    Bangalore: Tata Tea Ltd. and Tata Enterprises (Overseas) AG, the international arm of the Tata Group, have joined the special purpose vehicle (SPV) floated by Tata Coffee Ltd. to buy the U.S.-based Eight O'Clock Coffee Company from venture capital fund Gryphon Investors for Rs. 1,015 crore ($220 million).

    Tata Coffee Ltd. holds a 51 per cent stake worth $30 million in the SPV, which has executed the deal, while Tata Tea Ltd. has chipped in with an equity support of $19.9 million.

    Tata Enterprises (Overseas) AG has contributed another $10 million, taking the total equity pumped in by the Tata Group in the SPV to $59.9 million, M.H. Ashraff, managing director, Tata Coffee Ltd., told The Hindu .

    Exim Bank had earlier agreed to participate in the SPV as an equity partner with an investment of $10 million. But, with the Reserve Bank of India (RBI) yet to give approval for its involvement in the SPV, Exim Bank had to defer its participation for the time being.

    "We couldn't wait for the approval to come as the transaction had to be closed by July 31. Exim Bank may now join the SPV at a later date as an equity partner," Mr. Ashraff said.

    Rabobank International and its Indian arm, Rabo India Finance Pvt. Ltd., have provided a debt funding of $191 million to the SPV for bankrolling the $231 million acquisition, which includes transaction costs and working capital adjustments at closing.

    The debt funding comprises a $19.9-million bridge loan facility, which is currently debt but can be converted into equity at a later date.

    "We have paid the entire acquisition amount on July 31 and the company (Eight O'Clock Coffee) has now come under the fold of the Tata Group," Mr. Ashraff said. The acquisition of the unlisted Eight O'Clock Coffee will help Tata Coffee gain a strong foothold in the Rs. 97,000 crore ($21 billion) U.S. coffee market.

    The New Jersey-based Eight O'Clock Coffee Company is a top roaster and distributor of branded "value gourmet" and whole bean coffee with a market share of 52 per cent and 46 per cent respectively in the U.S.

    The company distributes its product through Wal-Mart, Publix, Albertson's, A&P, Super Valu and Food Lion.

    Within the broad U.S. retail coffee category, Eight O'Clock Coffee is the third largest brand by volume, behind Folgers and Maxwell House.

    The brand is uniquely positioned in the coffee marketplace at a mid-level price point with high quality 100 per cent Arabica beans and 150 years of brand equity.

    Sales have been growing at a compounded annual growth rate of over 14 per cent in the last three years.

    The acquisition is in line with the vision of Tata Tea Ltd., of which Tata Coffee is a 51 per cent owned subsidiary, to become a global beverage player.

    It follows a string of acquisitions by Tata Tea in various countries, including Tetley globally, Good Earth Tea in the U.S. and JEMCA in the Czech Republic. With the acquisition of Eight O'Clock Coffee, Tata Tea will now have significant scale in all-important markets in Asia, Europe and North America.

    Proteans raises funds

    Proteans Software Solutions, a Bangalore-based software product development outsourcing company, has said it has received strategic investment from Karnataka Information Technology Venture Capital Fund (KITVEN). "This investment will allow us to expand our infrastructure in India and accelerate our business development activities in the U.S.," said Prashant Singh, chief operating officer, Proteans. The company focusses on software product development and business application development on the Microsoft technology platform.

    It was founded in June 2003 by a group of entrepreneurs from the Indian Institute of Technology with a background of product development experience at Oracle, IBM and other top companies.

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