Dabur & Jubilant Group eye 40% stake in Coca-Cola India's bottling arm HCCB

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Dabur & Jubilant Group eye 40% stake in Coca-Cola India's bottling arm HCCB

Dabur & Jubilant Group eye 40% stake in Coca-Cola India's bottling arm HCCB

Industry News
Sep 02,24

The Burman family of Dabur and the Bhartia family, promoters of the Jubilant Group, are nearing a deal to acquire a 40% stake in Hindustan Coca-Cola Beverages (HCCB) for Rs 108-120 billion. This acquisition values Coca-Cola India’s wholly owned bottling subsidiary at Rs 270-300 billion, according to sources familiar with the matter.

The bids were submitted over the weekend, and Coca-Cola's parent company will soon decide whether to involve one or two co-investors or create an investor consortium. A final decision is expected by the end of the fiscal year.

Earlier this year, Coca-Cola reached out to various Indian business houses and billionaire family offices, including those of the Parekhs of Pidilite Industries and the promoter family of Asian Paints, to gauge their interest in HCCB. While only the Burmans and Bhartias proceeded to bid, the structure may involve their flagship companies, Dabur India and Jubilant FoodWorks, collaborating to leverage synergies in their existing FMCG and food portfolios.

HCCB, which handles Coca-Cola's bottling operations in southern and western India, reported a 40% year-on-year revenue increase to Rs 128.4 billion in FY23, with net profits more than doubling to Rs 8.09 billion. The potential stake sale is part of Coca-Cola’s broader strategy to reduce asset-heavy operations and focus on brand building, innovation, and competitive strategies, as the company moves towards an asset-light business model.

Coca-Cola’s decision to seek marquee business partners has caused friction with some independent bottlers, who believe they should have been offered the additional stake. Despite this, Coca-Cola is aiming for a significant premium, potentially valuing HCCB at up to $4-5 billion.

Globally, Coca-Cola’s bottling operations are managed by a mix of listed and privately held companies, with its top five bottling partners contributing 42% of its total unit case volume in 2022.

(ET)