The Burmans, promoters of consumer goods major Dabur, have withdrawn from the race to acquire around 40% stake in Hindustan Coca-Cola Beverages (HCCB), the bottling arm of Coca-Cola India, over valuation differences, sources told FE.
Discussions are currently on only with the Bhartias of Jubilant FoodWorks for the proposed investment in HCCB, with the latter looking to close the transaction by the end of the current calendar year, ahead of the Christmas season, the sources said.
HCCB has valued the 40% stake at around Rs 10,000-11,000 crore, with the enterprise value of the firm at Rs 25,000-33,000 crore, according to persons in the know.
Emails sent to the Burmans, Bhartias and HCCB elicited no response till the time of going to the press.
Had the Burmans stayed in the race, they could have harnessed synergies between their beverage business sitting in Dabur and HCCB, utilising the latter’s manufacturing facilities to produce its Real brand of juices, the sources said.
HCCB rolls out nearly 37 products for Coca-Cola in India, including carbonated drinks, juices and juice drinks.
For the Bhartias, too, a potential investment in HCCB has synergies since they run the country’s largest food service operator in Jubilant FoodWorks, the master franchise of Domino’s Pizza, among other brands in India. While Jubilant FoodWorks replaced Coca-Cola with Pepsi as its beverage partner at Domino’s Pizza outlets in 2018, Coca-Cola India in 2023 picked up a 15% stake in Hashtag Loyalty, an associate company of Jubilant FoodWorks, as part of its move to tap new-age distribution platforms and companies.
Hashtag Loyalty runs Thrive, an online food ordering platform based in Mumbai, competing with Swiggy and Zomato. Jubilant FoodWorks had bought a 35% stake in Thrive in 2021, which has come down to 29.75% following Coke’s investment in the platform. While Thrive’s operations are restricted to Mumbai for now, it has been looking to expand to other cities. The startup joined the Open Network for Digital Commerce (ONDC) last month.
HCCB’s monetisation drive, meanwhile, comes amid proposed plans to go public in about two years, sources in the know said. The company has been looking to onboard corporate groups as opposed to private equity investors in its pre-IPO investment round, even as the market for fizzy drinks grows.
Bottled soft drinks emerged as the biggest gainers during the summer months this year, breaching annual penetration of 50%, research agency Kantar said. It also noted that the consumption of bottled soft drinks had increased in the last two years on the back of growing distribution and affordable packs pushed by new and existing players. The average household consumption of carbonated drinks, for instance, has expanded by 250 ml over the last two years, with the trend expected to grow, Kantar said, as fizzy drink makers keep prices in check to drive consumption aggressively.
HCCB has been reorganising its operations ahead of its proposed monetisation plans, announcing the sale of bottling operations in Rajasthan, Bihar, the North-East and select areas of West Bengal to franchise bottlers earlier this year.
From: financialexpress
Financial News
