Tata Consumer plunges ~3% following rights issue announcement

24 Jul 2024 , 12:47 PM

On Tuesday, 23 July, Tata Consumer Products Ltd. announced a rights issue to raise up to ₹3,000 Crore. Tata Consumer Products’ board approved the rights issue in January of this year.

Tata Consumer proposes to offer 3.66 Crore rights equity shares worth ₹2,997.77 Crore.

The price of each rights share is fixed at ₹818, a 35% discount to Tata Consumer Products’ closing price on Tuesday. Existing Tata Consumer Products shareholders as of the record date will be eligible to receive one rights equity share for every 26 shares held.

Shareholders with fewer than 26 shares of the corporation will have no rights in the offer. Shareholders will have priority in receiving one additional Rights Equity Share if they apply for them. However, they would be unable to renounce their shares to third persons.

Tata Consumer Products has set a record date for its rights issue of July 27, 2024, which happens to be a Saturday. The rights issue will begin on August 5 and end on August 19, 2024.

Renunciations on the market might take place between August 5 and August 12, 2024. On-market renunciation occurs when rights are renounced on an exchange at a better price. It is typically completed three to four business days before the issue closes, which in this case is August 19.

Renunciations can also be completed off-market, in which the buyer and seller reach an agreement on a price and finalise the renunciation. This can be done until the offer is closed, but only if the buying investor has enough time to apply for the rights issue.

Tata Consumer Products paid ₹5,100 Crore for a 100% share in Capital Foods, which owns brands like Ching’s Secret and Smith & Jones. The company announced the acquisition of Organic India for ₹1,900 Crore, expanding into the health and wellness sector.

At around 12.44 PM, Tata Consumer was trading 2.26% lower at ₹1,228.45, against the previous close of ₹1,256.90 on NSE. The counter touched an intraday high and low of ₹1,257.70, and ₹1,217.40, respectively.

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