Ending year-long media speculation, Tata Coffee on Monday said it has sold its entire 34.31% stake in the leading coffee pub chain Barista to Sterling Infotech which is controlled by NRI businessman C Sivasankaran. With this acquisition, Barista becomes a 100% subsidiary of the Sterling group.
The exit of the Tatas from Barista did not catch anybody by surprise as it was considered a fait accompli ever since the Sterling group bought out over a 65% stake in the coffee pub chain from Turner Morrison in April this year. Both Tata Coffee and Sterling group sources declined to reveal the size of the deal.
According to highly placed sources in Tata Coffee, the exit has been in the offing for the past few months and talks were on with the Sterling group to get “a right price”. The deal was struck by both sides on Monday, they added. However, they declined to give details on the size of the deal citing secrecy clauses in the stock sale agreement.
Meanwhile, on The Stock Exchange, Mumbai (BSE), the Tata Coffee stock was locked at the 10% upper circuit at Rs 298.4 after the company’s announcement of its decision to exit its investment in Barista.
In 2001, Tata Coffee had bought the 34.31% stake in Barista from Turner Morrison for Rs 26 crore at a time when Barista was valued at Rs 100 crore.
A senior Sterling group official also told FE that the stock sale agreement was finalised and sealed by both sides on Monday. “We haven’t done any valuation for the Barista brand. I am unable to disclose the financial details of the deal,” the official said.
However, the official added the first priority of the Sterling group would be to enhance the reach of Barista coffee pubs by increasing the current number of 102 outlets. Tata Coffee had originally entered the coffee pub chain with an eye to getting into the “front end” of the coffee business, but had developed cold feet later, industry sources say.