Varun Beverages Slipped ~2% After Announcing Acquisition of 2 African Companies

On November 13, 2024, Varun Beverages shares dropped by approximately 2%, reaching a day low of ₹570.70 at 10:00 AM, after opening at ₹589.60. The decline in the stock price followed the company’s announcement of its acquisition of two African companies that manufacture and distribute PepsiCo products.

Varun Beverages Acquired Two Companies in Africa

Varun Beverages confirmed on November 12 that it has acquired full ownership of two African entities—SBC Tanzania and SBC Beverages Ghana. The deal valued SBC Tanzania at ₹1,304 crore and SBC Ghana at ₹127.1 crore. Both companies are involved in the production and distribution of Pepsi and other related beverage brands under the PepsiCo franchise.

SBC Tanzania operates five manufacturing facilities and reported a revenue of ₹1,505.3 crore for FY24, while SBC Ghana has one manufacturing facility, with a revenue of ₹32 crore in the last fiscal year. VBL stated that these acquisitions will help the company expand its presence across Africa. The deals are expected to be finalized by March 2025, subject to approvals from PepsiCo Inc and tax clearance from the revenue authorities in Ghana and Tanzania.

In addition to the African acquisitions, Varun Beverages also announced plans to acquire the remaining 39.93% stake in Lunarmech Technologies, a company in which VBL currently holds a 60.07% stake. The acquisition, valued at ₹200 crore, will make Lunarmech a wholly-owned subsidiary of VBL. Lunarmech manufactures plastic caps for PET bottles and generated ₹183.4 crore in revenue for FY24. The company’s production is already used by VBL in-house.

Fundraise of ₹7,500 Crore Via QIP

These developments follow Varun Beverages’ board approval on October 9, 2024, to raise up to ₹7,500 crore through a Qualified Institutions Placement (QIP). The raised funds will support VBL’s growth strategy, including investments in subsidiaries, joint ventures, and acquisitions, as well as expanding its product portfolio and geographic reach. The company aims to strengthen its position as one of the largest PepsiCo franchise bottlers globally.

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