The Jubilant Bhartia Group, promoters of Jubilant FoodWorks, is all set to acquire a 40% stake in Hindustan Coca-Cola Beverages (HCCB), the Indian bottling unit of US beverage giant The Coca-Cola Company.
On Wednesday, the Atlanta-based Coca-Cola announced that it had reached an agreement with the master franchisee of Domino’s Pizza for the stake sale. While the deal size was not announced, sources in the know say that the transaction is likely to be Rs 12,500 crore in size, valuing HCCB at Rs 31,250 crore.
The Bhartias are expected to tie-up with Goldman Sachs for funding the transaction. They are likely to get about Rs 4,000-5,000 crore on their own, which is about 40% of the deal value. Goldman Sachs may come in with the balance 60%, persons in the know said.
More importantly, the stake sale is likely to pave the way for an initial public offering of HCCB in about two years, sources added. The presence of a large corporate group is likely to boost investor interest ahead of the IPO, sources added.
“With its diverse experience in various sectors, Jubilant brings decades of rich experience that will help accelerate the Coca-Cola system, enabling us to win in the market and provide greater value to consumers,” Sanket Ray, president, Coca-Cola India, said.
Shyam S Bhartia, founder and chairman, and Hari S Bhartia, founder and co-chairman of the Jubilant Bhartia Group, said the investment was an “ideal addition” to their business.
“Together, we will leverage opportunities to grow the business to greater heights and ensure more Indian consumers can enjoy The Coca-Cola Company’s refreshing portfolio of iconic local and international brands,” the two said.
HCCB, which is the largest bottler for Coca-Cola in India, rolls out nearly 37 products, including carbonated drinks, juices and juice drinks.
HCCB reported a 9.2% increase in its FY24 revenue to Rs 14,021 crore versus a year ago, while its net profit rose 247% to Rs 2,808.3 crore for the period. While HCCB manages most markets in the south and west, franchise bottlers oversee key markets in the north and east.
Both Coca-Cola and Jubilant FoodWorks have had a long association in the past. 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.
Hashtag Loyalty runs Thrive, an online food ordering platform based in Mumbai, competing with Swiggy and Zomato. 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) recently.