PepsiCo India bottler Varun Beverages will reportedly buy Africa-based The Beverage Company (Bevco), according to Reuters.
The deal, valued at INR 13.2 billion (approx. $158.71 million), will enable Varun Beverages to secure entry into the African market.
In a filing to the Bombay Stock Exchange, Ravi Batra, chief risk officer & group company secretary at Varun Beverages, noted that the company’s objective was to “expand its geographical footprint in Africa”.
The document also stated that “the company (with an option to accept minority co-investment from large equity fund) intends to hold 100% of the equity share capital of Bevco”.
✔️ Varun Beverages is one of PepsiCo’s largest franchisees outside the US with over 30 manufacturing units in India, which package and distribute beverages under the Pepsi, Mirinda and Tropicana labels.
✔️ Bevco bottles and distributes PepsiCo-branded non-alcoholic beverages in South Africa and has five facilities in the country, including two in Johannesburg and one each in Durban, East London and Cape Town. In addition to these facilities, Bevco has further franchise rights in Lesotho, Eswatini, Namibia and Botswana.
According to an investor presentation from Varun Beverages, South Africa is the largest market for soft drinks on the continent and the rising affluence of South African households combined with longer workdays, urbanisation and an emerging interest from female consumers has led to growth in the industry.
Reuters added that since the Varun board approved the acquisition of Bevco, its share prices “soared as much as 17.8% to a record high”.
The Gurugram-headquartered company also inked a memorandum of understanding with the Jharkhand government, signalling its intent to establish a manufacturing facility in the state. The proposed capital expenditure for this venture amounts to INR 4.5 billion (approx. $54 million).
The Bevco deal is expected to be completed on or before 31 July 2024, subject to regulatory approvals.
Source: Reuters
