Varun Beverages Acquires PepsiCo Bottlers In Tanzania And Ghana, Completes Buying Lunarmech

Varun Beverages Ltd. announced a significant expansion in its business portfolio with the acquisition of full ownership stakes in two major beverage companies and the remaining stake in a third entity.

The company's board, at their meeting held on Tuesday, approved the purchase of SBC Tanzania for Rs 1,304 crore and SBC Beverages Ghana for Rs 127 crore, according to an exchange filing.

SBC Beverages Tanzania Ltd. specialises in the production and distribution of PepsiCo-branded nonalcoholic beverages across Tanzania. The 100% stake acquisition in SBCT is subject to regulatory approvals, including those from PepsiCo Inc., Tanzania's Fair Competition Commission, and the Tanzania Revenue Authority.

Similarly, SBC Beverages Ghana Ltd. manufactures and distributes PepsiCo-branded nonalcoholic drinks in Ghana. Varun Beverages’ acquisition of SBCG also awaits regulatory consent from entities such as PepsiCo Inc. and the Ghana Revenue Authority.

Additionally, Varun Beverages’ board approved the acquisition of the remaining 39.93% stake in Delhi-based Lunarmech Technologies Pvt. for Rs 200 crore. Lunarmech, currently a VBL subsidiary, produces plastic closures for PET bottles, which are used within VBL's own production lines. VBL’s current 60.07% stake will increase to full ownership once this transaction is complete, making Lunarmech a wholly-owned subsidiary.

These strategic acquisitions aim to strengthen Varun Beverages' manufacturing and distribution network across Africa while consolidating its supply chain capabilities through full ownership of Lunarmech.

In the third quarter of calendar year 2024, Varun Beverages' net profit rose 22% year-on-year to Rs 628.8 crore in the July–September period, according to an exchange filing on Tuesday.

This compares with a Rs 557 crore consensus estimate of analysts tracked by Bloomberg.

Shares of Varun Beverages' closed 1.10% lower at Rs 584.30 apiece, compared to a 1.07% decline on the benchmark NSE Nifty 50. It has risen 44.76% in the last 12 months and 18.10% on a year-to-date basis.

Twenty out of the 23 analysts tracking the company have a "buy" rating on the stock, three recommend a "hold," and zero suggest a "sell," according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 20%.