The Bhartia family of Jubilant Bhartia Group is set to acquire a 40% stake in Hindustan Coca-Cola Beverages (HCCB), the exclusive bottling arm of Coca-Cola India, for Rs 12,500 crore, The Economic Times reported.
The formal announcement is anticipated later today, said people familiar with the developments.
Goldman Sachs has agreed to exclusively finance the special purpose vehicle (SPV) established for the acquisition of HCCB’s stake and will be partnering with the Bhartia family on the deal, the sources added.
This deal marks the largest acquisition to date for the promoters of the pizza-to-pharma conglomerate. The Bhartia family, who hold exclusive franchise rights for Domino’s Pizza through their group company, Jubilant Foodworks Ltd (JFL), has opted not to over-leverage in this transaction. They are expected to contribute around Rs 5,000 crore of their own funds.
India, Coca-Cola’s fifth-largest market by volume, is seen as a crucial growth area for the company, with its low per capita consumption of packaged soft drinks offering significant expansion potential.
Coca-Cola’s Asset-Light Strategy
Coca-Cola India is following PepsiCo’s asset-light model, aiming to create value through the sale of its HCCB stake. This sale could pave the way for an IPO, helping to establish HCCB’s valuation. PepsiCo had previously shifted its bottling operations to Varun Beverages, significantly boosting Varun’s market value, according to a report by The Economic Times.
HCCB Financial Performance
Hindustan Coca-Cola Beverages recently reported a 9.2% increase in revenue, totaling Rs 14,021 crore for FY24, along with a 247% year-on-year surge in net profit. The company also plans to invest $1.5 billion over the next five years to expand its bottling capacities and develop new facilities in Gujarat and Madhya Pradesh.