Bhartia Family Acquisition of Hindustan Coca-Cola Beverages (HCCB)
The Bhartia family, leading the Jubilant Bhartia Group, is set to make a significant entry into India’s beverage market with the acquisition of a 40% stake in Hindustan Coca-Cola Beverages (HCCB), the exclusive bottling arm of Coca-Cola India.
This acquisition, valued at Rs 12,500 crore, represents the largest deal undertaken by the Bhartia family to date.
The deal is expected to be formally announced later today.
The Bhartia family is contributing Rs 5,000 crore from their own funds, while the remaining amount is being financed by Goldman Sachs, which has committed to funding the special purchase vehicle (SPV) set up for the deal. Goldman Sachs plans to later syndicate the investment to domestic mutual funds and foreign banks.
Before partnering with Goldman Sachs, the Bhartia family explored alternative financing options through Bain Credit and Apollo Global Management.
The acquisition aligns with Coca-Cola’s asset-light strategy, similar to PepsiCo’s approach with Varun Beverages Ltd.
This partnership allows Coca-Cola to leverage the Bhartia family’s vast expertise in the food and beverage industry, particularly through their ownership of Jubilant FoodWorks, which operates Domino’s Pizza in India.
India, Coca-Cola’s fifth-largest market globally by volume, presents significant growth opportunities.
The company has committed $1.5 billion in capital expenditures over the next five years, including Rs 3,000 crore for a new facility in Gujarat and Rs 350 crore for a plant in Madhya Pradesh.
The acquisition comes amid heightened competition in India’s beverage market.
Reliance Consumer Products Ltd’s revival of the Campa brand has introduced competitive pricing and increased trade margins, disrupting the market.
HCCB has also been actively expanding its distribution network, focusing on Tier-II and Tier-III cities.
HCCB reported a 9.2% increase in revenue to Rs 14,021 crore for the 2023-24 fiscal year, while their net profit surged by 247% to Rs 2,808.3 crore, as detailed in their filing with the Registrar of Companies last month.
