Dabur and Jubilant move closer to participatory ownership in Coca-Cola India’s bottling unit
02 September 2024, New Delhi
In a high-stakes chapter in the Indian consumer-beverage space, Burman family, owners of the consumer products behemoth, Dabur, and Bhartia family of the Jubilant Group, has made a play for a substantial stake in Hindustan Coca-Cola Beverages (HCCB). The two sides are currently believed to be finalizing negotiations around the acquisition of a 40% stake in Hindustan Coca-Cola Beverages, which is a wholly-owned bottling subsidiary of Coca-Cola India, at a valuation of between ₹10,800 crore and ₹12,000 crore ($1.3 to $1.4 billion).
Per sources having knowledge of potential transactions involving these parties, HCCB is at this stage being valued at that price, or around ₹27,000 crore or $3.21 billion to ₹30,000 crore or $3.6 billion. This represents a substantial strategic investment that is momentous to both families, since both are extremely large players in the fast-moving consumer goods (FMCG) and pharmaceutical industries in India, respectfully.
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The Burman and Bhartia families submitted their bids over the past weekend and now find themselves in the enviable position of competing for potentially significant ownership in the one of the largest bottling co-operatives, HCCB, in India. HCCB is an important component of Coca-Cola’s overall business in India as it handles all manufacturing and distribution outside of Coke’s bottling-cooperation in terms of geography.
It is understood that Coca-Cola Co., the parent company is expected to decide soon whether it will move forward with a deal with these two potential co-investors or whether it intends to explore feasibility associated with conducting discussions with both families about a consortium of other potential co-investors working with Coca-Cola associated with their bottling business operations in one of their largest markets outside of the United States.
If the acquisition and subsequent business integration see success, presumably significant change could occur in the operational and strategic context of HCCB after the acquisition. Burman and Bhartia families would possibly enhance the beverage drinks category by playing in the space, given their existing consumer and pharmaceutical companies, or executing growth or innovation in the existing portfolio of beverages.
As the beverage drinks market in India continues to evolve, it is imperative to consider the emergence of increased interest and importance of domestic conglomerates investing in local practicing units of global companies. In this frame of reference, the acquisition illustrates the strategic importance of the discrete Indian market within the global corporate environment.