The Bhartia family, owners of Jubilant Bhartia Group, is set to acquire a 40% stake in Hindustan Coca-Cola Beverages (HCCB), Coca-Cola India’s exclusive bottling arm, for ₹12,500 crore. This marks the group’s largest acquisition to date, as reported by The Economic Times.
Key Highlights of the Deal:
- Acquisition Details:
- The Bhartia family will acquire the stake through a special purpose vehicle (SPV) exclusively financed by Goldman Sachs.
- The family will contribute approximately ₹5,000 crore of their own funds to avoid over-leveraging.
- Strategic Significance:
- This acquisition aligns with Coca-Cola India’s asset-light strategy, which mirrors PepsiCo’s approach of offloading bottling operations to enhance value and focus on core operations.
- Industry experts believe this move could eventually pave the way for an HCCB IPO to establish its valuation.
- HCCB’s Financial Performance:
- HCCB posted ₹14,021 crore in revenue for FY24, a 9.2% increase YoY, with a 247% surge in net profit.
- It plans to invest $1.5 billion over the next five years to expand its bottling capacities and build new facilities in Gujarat and Madhya Pradesh.
- Coca-Cola India’s Market Outlook:
- India is Coca-Cola’s fifth-largest market by volume, with significant growth potential due to its low per capita consumption of packaged soft drinks.
- This acquisition positions HCCB to tap into the expanding demand in the Indian market.
- Jubilant Bhartia Group Background:
- The Bhartia family, also promoters of Jubilant Foodworks Ltd (JFL), holds exclusive franchise rights for Domino’s Pizza in India. This acquisition diversifies their portfolio into the beverage segment.
Industry Context:
Coca-Cola India’s asset-light model reflects a strategy seen earlier with PepsiCo, which transferred its bottling operations to Varun Beverages, leading to significant valuation gains for the latter. A similar trajectory is expected for HCCB post-acquisition.
