Bhartia family to acquire 40% stake in Hindustan Coca-Cola for Rs 12,500 cr

The Jubilant Group's Bhartia family is investing Rs 5,000 crore and the remaining amount is being financed by Goldman Sachs, which has pledged to fund a special purpose vehicle for the deal

The Bhartia family, promoters of the Jubilant Bhartia Group, is set to acquire a 40 per cent stake in Hindustan Coca-Cola Beverages (HCCB), the wholly owned bottling arm of Coca-Cola India, for Rs 12,500 crore, according to a report by The Economic Times. If successful, this will mark the family’s largest acquisition to date. The formal announcement of the deal is expected later today, the news report said. 

The transaction will be funded through a mix of equity and debt. The Bhartia family, led by Shyam and Hari Bhartia of the Jubilant Group, is contributing Rs 5,000 crore, with the remaining amount being financed by Goldman Sachs, which has committed to fund the special purchase vehicle (SPV) created for the deal. 

 

Bhartia family to lead India’s beverage industry

The acquisition positions the Bhartia family as a major player in India’s beverage industry. Hindustan Coca-Cola Beverages, which manufactures and sells 37 products across eight categories, including soft drinks, juices, and energy drinks, has been a major revenue driver for Coca-Cola India.

 

The company reported a 9.2 per cent increase in revenue to Rs 14,021 crore in financial year 2023-24 and a 247 per cent surge in net profit to Rs 2,808.3 crore, the company said in its filing to the Registrar of Companies last month.

 

The Bhartias opted for financing partnerships with Goldman Sachs to avoid over-leveraging their conglomerate. Goldman Sachs will later syndicate the investment to domestic mutual funds and foreign banks. Earlier, the family explored alternative financing options with Bain Credit, Apollo Global Management, and others.

 

Coca-Cola’s asset-light strategy

This acquisition aligns with Coca-Cola’s asset-light strategy, which is similar to rival PepsiCo's model of outsourcing bottling operations to Varun Beverages Ltd. The move allows Coca-Cola to leverage the Bhartia family’s extensive experience in the food and beverage sector through Jubilant FoodWorks, which operates Domino's Pizza in India.

 

India, Coca-Cola’s fifth-largest market by volume, presents significant growth potential. The company has announced a $1.5 billion capital expenditure plan 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 at a time when the Indian beverage market is becoming increasingly competitive. Reliance Consumer Products Ltd recently revived the Campa brand, which has disrupted the market with aggressive pricing and higher trade margins. Meanwhile, HCCB continues to expand its distribution network into Tier-II and Tier-III cities.