August 24, 2006 By Khozem Merchant in Mumbai Financial Times Tata Tea, the acquisitive beverages group, has acquired a 30 per cent stake in the US health drinks group Energy Brands, maker of Glaceau, for $677m in the largest overseas acquisition by an Indian company. Tata Tea GB and Tata Sons, the holding company of the Mumbai-based steel to technology conglomerate, will fund the acquisition through $250m of equity and the balance from debt. The stake was bought from TSG Consumer Partners, a US private equity fund that invests in branded consumer assets. Though it holds only 30 per cent of the health-drinks group, Tata has negotiated the right to nominate the chairman, and two of the five directors will be nominees of the Indian company, suggesting Tata could drive strategy. Energy Brands will begin to contribute dividends to Tata from the third year and will, in any case, accelerate Tata Tea's aim of doubling revenues to Rs70bn (Dollars 1.5bn) before the end of the decade. Mr R K Krishna Kumar, chairman of Tata Tea, said he was "hopeful" Tata would raise its stake. Mr Kumar promised "exciting things" from the Glaceau vitamin waters which are sold across 40 states in the US, after two years. By then, he added, Glaceau, which has been enjoying strong growth in the US, could be set for a public offering. The acquisition marks Tata Tea's first move into health drinks - part of a long-held strategic ambition to pull away from its plantation lineage towards value-added beverages. The Tata group's revenues from overseas have tripled to Dollars 6bn, more than one-quarter of the total, in the past three years. Recent overseas buys include the commercial vehicles unit of Daewoo Motors, Millennium Steel in Thailand and a hotel in the US. Copyright 2006 The Financial Times Limited Copyright © 2008 TSG Consumer Partners. All Rights Reserved.