Tata Coffee Limited shares climbed over 12% to Rs 220.90 on the BSE in Wednesday’s intraday trade after Tata Consumer Products Ltd (TCPL) announced the merger of all businesses of Tata Coffee with itself as part of a reorganisation plan in line with its strategic priority of unlocking synergies and efficiencies.

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While Tata Coffee Ltd (TCL)’s plantation business would be demerged into TCPL’s wholly-owned arm TCPL Beverages & Foods Ltd (TBFL), TCL’s remaining business, which includes its extraction and branded coffee businesses, will be merged with TCPL, the company said in a statement.

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The demerger will be the first phase, followed by the merger, both of which will be proposed through a composite scheme of arrangement.

TCL shareholders (other than TCPL) will receive an aggregate of 3 equity shares of TCPL for every 10 equity shares held in TCL under the plan.

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This will be accomplished by issuing one TCPL equity share for every 22 TCL equity shares in consideration for the demerger. According to the terms of the merger, 14 TCPL equity shares will be issued for every 55 TCL equity shares.

“This will enable the consolidation and 100 per cent ownership of the branded, extractions & plantations business of TCL into TCPL and its wholly-owned subsidiary,” it said.

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The boards of directors of TCPL and TCL authorized the merging of TCL’s plantation business with TBFL during their respective meetings on Tuesday, the company said.

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Tata Coffee increased its consolidated net profit by 38.42% to Rs 69.46 crore in the three months ended December 2021, owing to high revenues. According to a BSE filing, the company made a net profit of Rs 50.18 crore in the same quarter of the previous fiscal year. In the third quarter of the fiscal year, net revenue climbed 17.51% on a consolidated basis to Rs 626.07 crore. In the previous year, the figure was Rs 532.76 crore. The company’s expenses were higher, at Rs 541.36 crore, compared to Rs 470.21 crore in the previous period.