Global beverage major Coca-Cola announced sale of 40 per cent stake in its India bottling business Hindustan Coca-Cola Beverages Pvt Ltd (HCCBL) to Jubilant Bhartia Group.
Though the company has not disclosed the amount of the deal, some media reports have pegged it at around Rs 10,000 crore for 40 per cent stake in Hindustan Coca-Cola Holdings (HCCH).
The Bhartia family-led group in a statement said “they have entered into a definitive agreement for a strategic investment whereby Jubilant Bhartia Group will be acquiring a 40 per cent equity interest in Hindustan Coca-Cola Holdings Pvt Ltd, India (HCCH) through its entity Jubilant Beverages Limited. HCCH is the parent company of HCCBL, the largest Coca-Cola bottler in India.”
According to sources, individuals familiar with the deal at Bhartia Group have signed non-disclosure agreements with the beverage major. However, media reports suggest the deal is pegged at around Rs 12,500 crore, valuing HCCB at Rs 31,250 crore.
Sanket Ray, president of Coca-Cola India and Southwest Asia operating unit, in a company statement, said: “Jubilant’s rich experience will help accelerate the Coca-Cola system, enabling us to win in the market and provide greater value to local communities and consumers.”
Jubilant Bhartia Group was advised by Morgan Stanley as the exclusive financial advisor, while Rothschild & Co advised Coca-Cola.
Both companies see several synergies and benefits between HCCB and existing businesses of Jubilant Bhartia Group, like Domino’s Pizza and other food chains. Both partners will take the company to the next level, said a banker close to the deal. HCCB primarily operates in the South and West Indian markets.
The Bhartias are expected to tie up with Goldman Sachs for funding the transaction, with the former likely to contribute 40 per cent (around Rs 4,000-5,000 crore) and the rest by the investment bank, media reports said.
The move comes as part of The Coca-Cola Company’s (TCCC’s) strategy of refranchising its bottling operations globally as part of its asset-light strategy.
Earlier this year, the company said it had “recorded net gains of $293 million related to the refranchising of its bottling operations” in Rajasthan, Bihar, West Bengal, and the Northeast.
The deal gives the Bhartia family an entry into the bottling industry at a time when consumption is expected to rise, the banker added.
“We are excited to partner TCCC, which has a portfolio of the most well-recognised, iconic beverage brands across the world. India is one of the largest and fastest-growing beverage markets globally and a key focus within the TCCC ecosystem,” said Shyam S Bhartia, founder and chairman, and Hari S Bhartia, founder and co-chairman of Jubilant Bhartia Group, in a company statement.
The company will acquire the equity interest through its entity, Jubilant Beverages. “This strategic investment represents an important milestone in our journey. Jubilant Bhartia Group’s expertise complements our strengths, ensuring that we continue delivering exceptional value to our stakeholders while driving innovation and sustainable progress,” said Juan Pablo Rodriguez, chief executive officer of HCCB.
India is the fifth-largest market for Coca-Cola globally.
According to financial data accessed by business intelligence platform Tofler, the company reported a 4 per cent jump in revenue to Rs 4,802 crore in 2023-24 (FY24). Meanwhile, its net profit fell 32 per cent to Rs 420 crore in the same financial year (FY24).
HCCB’s revenue was up 10.1 per cent to Rs 14,021.54 crore in FY24, and the net profit soared threefold to Rs 2,808.31 crore.
HCCB manufactures and sells 60 different products across seven categories. Its products include Coca-Cola, Thums Up, Sprite, Minute Maid, Maaza, SmartWater, Kinley, Limca, Fanta, and many more.
Bhartia Group’s Jubilant FoodWorks, meanwhile, holds the franchise rights for global quick-service restaurant chains like Domino’s, Dunkin’, and Popeyes.
