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Varun Beverages plans to acquire PepsiCo’s franchisee rights in three states

By TEAM VCC

  • 07 Feb 2019
Varun Beverages plans to acquire PepsiCo’s franchisee rights in three states
Credit: Pixabay

Varun Beverages Ltd said on Thursday its board has approved a plan to acquire PepsiCo India’s franchisee rights in three states from SMV Group.

The Ravi Jaipuria-led company said in a stock-exchange filing it will acquire the rights in 13 districts of Karnataka, 14 districts of Maharashtra and three districts of Madhya Pradesh. 

Upon completion of this acquisition, Varun Beverages will be a franchisee for PepsiCo products across 22 states and two union territories, the company said.

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The deal is subject to completion of due diligence and final approval of PepsiCo, it added. It didn't give any financial details.

Varun Beverages said it is acquiring the rights for areas that are highly under-penetrated and provide a huge opportunity to increase volume and gain market share. 

The proposed acquisition is in line with the company’s strategy to expand into contiguous territories to garner better operating leverage and asset utilisation through economies of scale, chairman Jaipuria said.

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SMV is controlled by Ravi's brother Surya Kant Jaipuria. In August 2017, Varun Beverages had acquired PepsiCo's rights in two states from SMV.

Varun Beverages is one of the largest franchisees in the world (outside the US) of carbonated as well as non-carbonated beverages sold under brands owned by PepsiCo.

The company produces and distributes beverages such as Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon, Mountain Dew, Tropicana Slice and Nimbooz as well as packaged drinking water under the brand Aquafina. In addition, it has the franchise for the Ole brand of PepsiCo products in Sri Lanka.

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The company counts AION Global, the special situation investment firm jointly run by Apollo Global and ICICI Venture, and Standard Chartered Private Equity as investors. 

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