Global soft drink giant Coca-Cola has made a pre-merger filing with the US anti-trust regulators regarding a possible acquisition of energy drink maker Glaceau, in which India's Tata Group holds a 30 per cent stake, according to sources.
Coca-Cola has filed a pre-merger Hart-Scott-Rodino Act notification with the Federal Trade Commission, trade publication Beverage Digest reported.
The filing is necessary for deals of significant size under anti-trust regulatory framework, which seeks to prevent merger and acquisitions that could reduce competition, lead to higher prices, lower quality of goods or services, or decrease innovation.
Citing unnamed sources in its special edition published on Monday, the magazine said that the HSR filing triggers a review of any possible antitrust implications of the proposed deal. It could mean several things ranging from Coke having an agreement to acquire Glaceau to Coke having a non-binding letter of intent for such a deal, the report said.
The report quoted sources as saying that the FTC only begins its review process when the major deal points are agreed upon, at least in principle, but a deal could be and was likely, still subject to Coca-Cola Co board approval.
While it was not known when Coke filed the HSR notification with the FTC, a review process normally takes 30 days. However, it could be shorter or longer in certain cases. Glaceau, in which Tata Tea had acquired a 30 per cent stake for $677 million in August last year, was reported to be on Coke's takeover radar earlier last month.
A Tata Tea spokesperson in India said: "We do not wish to comment on speculations."
Based on the price of Tatas' acquisition, New York-based Glaceau could be valued at close to $2.25 billion. However, market speculations have put the value of the deal anywhere between $3 and $4 billion.
Last month, reports in The Wall Street Journal as well as two industry publications -- Beverage Digest and Beverage Business Insights quoted unnamed sources as saying the world's largest soft drink maker was in serious negotiations to acquire part or all of Glaceau.
The reports sent shares of Tata Tea soaring by close to 15 per cent on the Indian bourses on April 25. Although it was not clear whether Coca-Cola was looking to acquire Tatas' stake or not, brokers said the sharp rally in Tata Tea's shares today was triggered by expectations that the company could reap a huge premium on its stake in Glaceau if the US giant decides to acquire 100 per cent of the North American energy drink maker.
Shares of Coca-Cola, which has a market cap of about $120 billion, dropped 1.4 per cent to $51.91 at New York Stock Exchange on Monday.
