Diversified group RJ Corp-owned Varun Beverages (VBL) is set to acquire PepsiCo’s company-owned bottling, sales and distribution operations in South and West India for its carbonated drinks business and the announcement is expected within this week itself, a top official directly aware of the developments said. This will give the BSE-listed VBL national franchise ownership of the New York-based PepsiCo’s India bottling operations. VBL is already the franchise partner for PepsiCo’s bottling operations in the North and East and accounts for over 51% of its India sales volume.
“The details of the deal have been finalised; senior managers are going to key cities to meet employees and brief them about the change in franchising. A few regulatory approvals are pending and the announcement to employees about the franchising is expected very shortly,” this official said.
ET had reported in its January 14 edition that PepsiCo and RJ Corp are in advanced talks for the same.
The maker of soft drink brands Pepsi and Mountain Dew has been divesting its bottling operations globally to operate asset-light businesses across world markets. The transaction will involve largescale transfers of employees and assets.
“Close to 200 employees across functions and levels have quit over the past 12-15 months, the company hasn’t been able to attract much top-tier talent and carbonated soft drinks as a category has lost resilience,” this official said.
The size of the deal is expected to be anywhere between Rs 2,400 and Rs 2,700 crore which is more than RJ Corp had paid in 2014 for PepsiCo’s bottling operations in the North and East. The business is about 130 million cases of carbonated soft drinks plus water, the official quoted above said. PepsiCo will continue to own the brand name and sell concentrates to franchisees, while sales and distribution will be operated by the franchisees.
The $1.6-billion RJ Corp, among PepsiCo’s top three bottlers globally, has been associated with the beverage and snack maker since close to three decades. Its businesses include franchisee operations for Yum Restaurants-owned Pizza Hut and KFC and Coca-Cola-owned coffee chain Costa Coffee — both are operated under RJ Corp’s other group company Devyani International (DIL). Besides, DIL runs its own Cream Bell brand of dairy products and grocery retail chain JMart.
Source: Economic Times