Watawala split in two to attract more investors
View(s):Watawala Plantations PLC in a bid to be more feasible to potential investors announced recently that it intends to separate tea from other businesses, forming two separate independent listed companies.
One will focus on tea, the other on rest of the products, Vish Govindasamy, Managing Director of the company told the Business Times. With this move the company aims to attract more investors, he said.
“For an example, say an investor wants to put in money of Rs. 200-300 million only in a tea factory and that he doesn’t want to invest in Watawala’s other businesses. This strategy enables him to partner with the particular company,” he explained. This separation of the business activities will enable the two companies to focus on their respective areas of activity and achieve strategic specialisation and will further enable their respective boards to adopt financial and operational policies which are appropriate for their respective strategic objectives.
The separation will be made under an arrangement which will be subject to court approval under the Companies Act.
With this arrangement the existing shareholders of Watawala Plantations PLC will be entitled to identical shareholdings in the new company and the employees of the two companies will continue to enjoy their existing benefits and privileges under the recent terms of employment and there will be no negative impact on their existing entitlements.