The Hindu Business Line : McLeod Russel’s arm buys Rwanda tea factory

World’s largest tea producer McLeod Russel India Ltd said on Tuesday that its UK arm has acquired, indirectly though, controlling stake in Gisovu Tea Company, Rwanda, producing an estimated 1.7 million kg tea annually.

With this acquisition, McLeod’s total production capacity goes up to close to 82 million kg annually.

Borelli Tea Holdings Ltd of the UK, a wholly-owned subsidiary of the company, has signed a shareholder’s agreement to acquire 75 per cent equity stake of Olyana Holdings LLC of the US, the balance 25 per cent going to Mr George W. Rubagumya. Olyana Holdings, in turn, has signed an agreement with the Government of Rwanda for acquisition of 60 per cent shares in Gisovu Tea Company.

Borelli Tea Holdings will pay $2.75 million for its stake in the US-based company. Post-acquisition, the Rwandan Government will hold 30 per cent stake, co-operatives 10 per cent, and Olyana 60 per cent in Gisovu.

“It is a dream come true,” Mr Aditya Khaitan, Managing Director of McLeod Russel, told Business Line, adding, “we’ve been looking for opportunities in Africa for long.”

In 2008-09, it acquired Phu Ben Tea Company in Vietnam, producing nearly five million kg annually.

“We’ll invest in Gisovu to step up its production to two million kg annually within a year or two,” said Mr Khaitan. “We’ve plans to acquire another 1,000 hectares in that area and raise the total production to four million kg annually, may be within four to five years,” he said.

Asked about the size of investment to be needed to achieve the targeted production, he replied that it could be $6-7 million but nothing is finalised yet. “Our team will visit Rwanda shortly to firm up plans,” he added.

According to a press statement, Olyana’s acquisition of the controlling stake in Gisovu is on a long-term basis with the objective of developing its plantation, manufacturing and marketing to make it globally competitive with the support of the Government of Rwanda.

Olyana will implement the Gisovu Business Plan as envisaged in the share sale agreement and explore possibilities of processing and marketing of Gisovu’s teas in collaboration with the Government of Rwanda.

Related Stories:
McLeod asks Vietnam more land to double tea output
McLeod Russel net up on tea price boom

More Stories on : Tea | Overseas Investments | Mergers & Acquisitions

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