The Bisleri acquisition

Throughout history, mergers and acquisitions have taken place not only to deal with economic and
financial crises, but also to achieve greater profits and stability. During the past few years due to
increase in competition, as a result of globalization and other economic reforms. India has witnessed a
drastic growth in mergers and acquisitions. The most recent example, doing the rounds in all social
circles is the envisaged Bisleri international acquisition by tata consumer products limited. Moreover if
this contract were to materialize it would be the biggest acquisition in the FMCG space in india till now.
Now before I delve deep into this topic, delineating it and becoming too verbose. I would like to provide
the reader with the meaning of the word acquisition. In layman’s language it is a strategic decision
which involves consolidation of two or more business entities into one entity for reasons such as
diversification and growth.

Now the key perplexing question which arises is how will this potential acquisition benefit TPCL and as
a consequence its effect on the FMCG sector of india? Firstly if this deal is sealed the bisleri brand
name shall open a spectrum of new avenues in the beverage sector for TPCL, in turn making it a leader
in the bottled water segment. Elaborating more on the intricacies of this acquisition. TPCL is in
discussions to buy a majority stake in packaged water major Bisleri International for Rs 6,000 crore-Rs
7,000 crore. As part of the overall deal, it is expected that the current management of bisleri would
continue for two years following the closing of the transaction. As far as the implications of this deal on
competing players are concerned, the proposed deal is likely to have a considerable impact. Also if this
acquisition takes place in the market, the other players in the industry shall likely engage in a bidding
war for remaining targets, which shall result in overvalued transactions. Furthermore, when two robust
players in the market join forces, such as in the case of TPCL and Bisleri ,the competitiveness of the
market automatically tenses up. Which shall consequently lead to reduction in the prices because of the
consolidation in market, and higher productivity. Moreover on the macro level, the prices of similar
products should reduce given the increased variety to benefit the consumers. However, as a result of
this acquisition, the smaller companies may be forced to exit the market owing to cutthroat
competition. The effect of the proposed combination would result in a bigger space for the Indian retail
sector not only limited to packaged mineral water segment. Furthermore, with more than 5,000 delivery
trucks and over 4,500 distributors’ network, Tata will be getting higher volume and a 30 percent share of
the organised market, and value-add to its existing brands. Therefore the logic behind the proposed
acquisition is clear, cost synergies and cross-selling of Tata’s water brands to Bisleri . Conclusively
resulting in cost savings and effectiveness for the merged entity.

When all is said and done, The proposed transaction would indeed constitute a marriage of two iconic
brands that evoke trust in the consumers.  It is estimated that revenue of the TCPL will be increased by
10-15 percent in the subsequent years, which will reflect on its share prices. In a word, this is ‘once in a
decade’ deal, and will have multiplier effects on the overall Indian retail industry.