Varun Beverages has initiated a Qualified Institutional Placement (QIP) at an indicative price with a 1% discount to the current market price (CMP) as it unveils strategic expansion plans. On November 12, the company announced three major acquisition proposals to strengthen its footprint in Africa and enhance production capabilities in India.
Key Acquisition Highlights:
- SBC Beverages Tanzania Limited (SBCT):
- Acquisition Value: Approximately ₹1,304 crore, based on an equity valuation of $154.5 million.
- Operations: SBCT operates five manufacturing facilities in Tanzania (Dar-es-Salaam, Mbeya, Arusha, and Mwanza).
- Market Position: Holds a 44% market share in Tanzania’s carbonated soft drinks market.
- Financial Performance: Recorded net revenues of ₹1,505 crore in FY24, producing 74 million 8oz cases.
- Products: Produces PepsiCo brands such as Pepsi, Pepsi Max, 7UP, Mirinda, and its own energy drink brand, Supa Komando.
- SBC Beverages Ghana Limited (SBCG):
- Varun Beverages is set to acquire 100% of SBCG, expanding its presence in West Africa.
- Lunarmech Technologies Pvt Ltd:
- Varun Beverages plans to acquire the remaining 39.93% stake in Lunarmech Technologies, a producer of plastic closures for PET bottles, which are integral to Varun’s production process.
Strategic Implications
These acquisitions align with Varun Beverages’ strategy to boost production capacity, gain greater control over its supply chain, and solidify its position in key markets. The acquisition of SBCT and SBCG enhances Varun’s access to the growing African beverage market, while the increased stake in Lunarmech Technologies supports its production efficiency in India.
With its expansion plans and strategic acquisitions, Varun Beverages remains a stock to watch as it continues to grow its market share and operational footprint in both domestic and international markets.
