Tata Coffee-Tata Consumer merger gives traders a shot at arbitrage

4% spread on offer; analysts bullish on long-term prospect of merged entity

The impending merger between Tata Coffee (TCL) and Tata Consumer Products (TCPL) has presented an exciting arbitrage opportunity for traders. Considering the current prices of the two stocks and swap ratios, investors can pocket a spread of up to 4 per cent, observes a note by IIFL Securities.
 
To streamline business operations, Tata Group in March 2022 announced a merger between TCL and TCPL. Following the effectiveness of the scheme, the shareholders of TCL (other than TCPL) as on record date will receive three equity shares of TCPL for every 10 equity shares held in TCL. This will be done