Coca-Cola is in exclusive talks with Cafe Coffee Day for acquiring stake

Coca- Cola is likely to pick up a significant stake in Café Coffee Day (CCD) as a chance to hedges risks that come with its carbonated drinks business. It is also a good time for Coca- Cola to take this step as the Café’s space is blooming recently.

With a footprint of 1,750 cafes, CCD continues to be the market leader in the organized café space and, Café Coffee Day Enterprises reported standalone net sales of Rs 76.9 crore for the quarter ended March 2019, up 43.64% year-on-year.

 The reasons for the acquisition of the stakes are as follows:

  1. Rising debt and competition from the other Café’s as well as Tea Café’s, including some renowned names like Chaayos and Chai Point, shuttling down 90 small format stores in the Financial Year 2018.
  2. Café Coffee Day makes a quarterly net loss that stood at Rs 22.28 crore the quarter, compared to Rs 16.52 crore in the corresponding year-ago quarter.

Coca- Cola, in the month of September 2018, had announced the acquisition of UK Coffee Chain, Costa Coffee, that would be applicable globally from the parent company Whitbread PLC for $5.1 billion. This didn’t have many connotations on India, as there are less than 50 operational stores, considering that Costa Coffee is only operated by RJ Corp in India.

Siddhartha sold 20.32% stake that was held by him along with two CCD affiliated firms, which are Coffee Day Enterprises Ltd and Coffee Day Trading Ltd in Mindtree to Larsen and Toubro in March 2019, for 3,200 crores.

This could be an incredible deal for Coca- Cola, as they can make a mark in the Café Sector as well.

Link: https://economictimes.indiatimes.com/industry/cons-products/food/coca-cola-in-exclusive-talks-with-cafe-coffee-day-for-acquiring-stake/articleshow/69957148.cms

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Nida Sarguroh

Nida Sarguroh5 Posts

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