PepsiCo Inc. soda is displayed for sale. (Photographer: Luke Sharrett/Bloomberg)

Varun Beverages To Acquire Franchise Rights For PepsiCo In South, West India

PepsiCo India's bottling partner Varun Beverages Ltd. on Monday said its board has approved plans to acquire franchise rights of the beverages and snacks major in south and west regions.

The board has approved the company's intent to enter into a binding agreement with PepsiCo India Holdings to acquire franchise rights in the two regions for a national bottling, sales and distribution footprint in seven states and five union territories, the company said in a regulatory filing. Upon completion of these acquisitions, the company will be a franchise of PepsiCo beverages business across 27 states and seven union territories, it said.

"The proposed acquisitions are in line with the company's strategy to expand into contiguous territories and will help to acquire greater scale, operational productivity and efficiency leading to higher revenues and profitable growth," it said. Varun Beverages, however, didn't disclose financial details of the proposed acquisitions.

The company said its board will meet on Feb. 26 to consider raising of capital through qualified institutional placement. Comments from PepsiCo India couldn't be obtained immediately.

Varun Beverages had entered into a pact with PepsiCo in January last year to sell and distribute the latter's Tropicana range of juices along with Gatorade and Quaker Value-Added Dairy in north and east India. Varun Beverages already held manufacturing, sales and distribution rights for Tropicana Slice and Tropicana Frutz in the two regions.

PepsiCo had then stated that north and east regions together accounted for 80 percent of the juice market in India and Varun Beverages' contiguous reach would help it more than double the distribution reach in these states.

Also read: Varun Beverages To Acquire PepsiCo’s Franchised Sub-Territory In Jharkhand