Tata Group's company, Titan, has successfully acquired the remaining 27.18 percent stake in its subsidiary CaratLane, a jewelry business, for a cash sum of Rs 4,621 crore. This significant move involved purchasing the stake from the founder of the brand, Mithun Sacheti, and his family. Titan officially announced this transaction through a filing on the stock exchange, detailing their intent to procure a total of 91,90,327 equity shares of CaratLane, which would result in Titan holding a notable 98.28% ownership stake in the company on a fully diluted basis.

However, this acquisition is contingent upon obtaining customary regulatory approvals and fulfilling closing conditions. The financing of this transaction is planned to be a combination of cash reserves, internal accruals, and debt. Notably, only approval from the Competition Commission of India is required.

For the fiscal year 2022-23, CaratLane achieved a turnover of Rs 2,177 crore. This acquisition has led to the valuation of the company at 7.8 times its sales for that fiscal year, valuing it at Rs 17,000 crore.

This deal has garnered attention as the second-largest exit for an e-commerce founder in India, trailing only the departure of Flipkart founders Sachin Bansal and Binny Bansal who sold their stakes to Walmart.

Upon the completion of the acquisition, Titan's collective ownership in CaratLane will amount to 98.28% of the equity share capital and voting rights on a fully diluted basis. The strategic importance of this acquisition is emphasized, as Titan expresses confidence in the growth potential of CaratLane under the esteemed Tata Group. Both companies are optimistic about the future prospects and opportunities that this integration will provide.

CaratLane has maintained a strategic partnership with Titan's jewelry brand Tanishq since 2010. Over time, Titan progressively increased its stake in CaratLane from 2016 to 2019, reaching 72.30% ownership through additional investments.

Earlier discussions about Tata Group's acquisition of CaratLane had faced obstacles due to valuation concerns. The remaining 27.8% ownership was distributed among three CaratLane founders and some employees.

The agreement between Titan and CaratLane stipulates that Titan had the option to acquire the remaining 28% stake starting in 2021. Conversely, other shareholders held the right to exercise a put option on Titan for their stakes starting in 2023.

A valuation process was outlined in which both parties could appoint an independent banker for a third-party assessment of the brand's value. The resulting average from both assessments would be adopted as the agreed-upon value. Notably, there was no arbitration provision in case of disputes.

Earlier this year, Titan engaged Bank of America to assess the remaining stake's value. Bank of America's offer in March valued the entire CaratLane company at Rs 6,000-7,000 crore, equating to Rs 1,680-1,960 crore for the founders' stake. However, this offer was rejected by CaratLane.

Titan's jewelry division boasts prominent brands including Tanishq, Zoya, Mia by Tanishq, and CaratLane. In the fiscal year 2023, this division contributed significantly to the company's turnover, accounting for about 88% of Titan's overall revenue, which totaled Rs 31,897 crore.