Million dollar beverage company PepsiCo plans to divest its bottling franchisee rights in the West and South of the country. The company in talks is Varun Beverages in a deal estimate of Rs 1,850 and will involve the transfer of 1,900 employees.
Varun Beverage has agreed to manage the packaging, distribution and sales in seven states and five Union Territories from PepsiCo India, said Varun Beverages in a stock exchange filing on Monday.
Once the formalities are completed, VBL will be PepsiCo’s franchise in 27 states in India as well as the 7 union territories.
PepsiCo India president Ahmed El Sheikh in a statement said that this franchise could help VBL establish a strong foothold in the bottling and sales domain. This could given VBL an opportunity to increase their scale of production and distribution.
The company share has closed at Rs 774 on the Bombay Stock Exchange on Monday, up 1.24% from its previous closing.
The maker of soft drink brands Pepsi and Mountain Dew have been divesting its soft drink operating around the world so as to have a lighter asset across the global markets.
PepsiCo has maintained that they would continue to create content, build the brand and development of the beverage portfolio and hopes to continue enabling sustainable growth. PepsiCo now will only focus on marketing instead of bottling.
The $1.6-billion RJ Corp, among PepsiCo’s top three bottlers globally, is also a franchisee partner for Yum Restaurants-owned Pizza Hut and KFC and Coca-Cola owned coffee chain Costa Coffee.
VBL had acquired plans to acquire franchise rights of PepsiCo in three states from SMV group so expand their business.
“The proposed acquisitions are in line with the company’s strategy to expand into contiguous territories and will help it acquire greater scale, operational productivity and efficiency leading to higher revenues and profitable growth,” VBL said.
The company added that their board will have a meeting on February 26 to talk about raising the capital through a certified institutional placement.
