Kolkata-based tea plantation major Mcleod Russel India Ltd is acquiring the Uganda business of UK-based James Finlay Ltd. Mcleod's subsidiary Borelli Tea Holdings Ltd is picking up a 100% stake in James Finlay (Uganda) Ltd for a provisional consideration of $25 million, it said in a release. The deal will also involve Borelli paying another $5 million to the vendors, James Finlay and James Finlay International Holdings Ltd, payable as inter corporate debt.
The share price of Mcleod, part of the BM Khaitan group, was at Rs 261.1 at close of trade today, up by more than 1.5%.
The transaction involves Borelli entering into a share purchase agreement with the vendors to buy Uganda's Rwenzori Tea Investments, which owns a 100% in James Finlay (Uganda) Ltd. The acquired firm is involved in growing, processing and marketing of black tea and owns six tea estates with annual production around 15 million kgs. of black tea. James Finlay (Uganda) is profit making and dividend paying, the release added.
This deal follows Mcleod's buy of Gisovu Tea Company in Rwanda, which has a capacity of producing around 1.7 million killograms of tea annually. The new acquisition will help McLeod Russel expand its capacity to 96 million kgs per annum. Mcleod could also look at expanding its operations in Uganda further.