TSG in 14x drinks exit to Indian buyer

Tata Group, one of India’s biggest industrial conglomerates. is buying Glaceau from San Francisco-based TSG Consumer Partners for $677m, generating a multiple of a roughly 14 times over just three years.

TSG Consumer Partners, a private equity firm focused on consumer product companies, has agreed to sell its 30 percent interest in Glaceau, a maker of “vitamin water”, to Tata Group for $677 million (€529 million).

Mumbai-based Tata Group has global revenues of roughly $22 billion and interests in many consumer-oriented businesses. The company has estimated US revenues of more than $1.97 billion, and already owns North American brands Tetley Tea and Good Earth Teas.

In June, Tata agreed to buy Eight O’Clock Coffee from Gryphon Investors, a San Francisco private equity firm for an undisclosed amount.

San Francisco-based TSG Consumer, formerly known as The Shansby Group, originally invested in Glaceau, then called Energy Brands, in April 2003. A source familiar with the transaction said the 30 percent interest was acquired for less than $50 million. TSG Consumer declined to comment on the deal.

Glaceau makes vitamin water, fruitwater and smartwater. In a statement, the company describes itself as “started by a guy [J. Darius Bikoff] who simply wanted better water and couldn’t find it”. The company was founded in 1996.

The $677 million sale of the stake to Tata would represent a roughly 14x return on TSG Consumer’s investment in three years. The investment is being made through the Tata Tea division.

TSG Consumer is led by managing director and chief executive Charles Esserman, a former Bain & Co. consultant. The firm’s chairman is Gary Shansby, the former chief executive of Shaklee Corporation, a direct marketer of household products.