Coke to divest 5% stake in bottling arm

Coca-Cola India has decided to divest up to a five per cent equity in its bottling subsidiary, Hindustan Coca-Cola Beverages, in favour of its existing licensed bottlers as well as former bottlers.

The move is part of the company's decision to offload a 49 per cent stake in HCCB. The company has already divested a 10 per cent stake in the company in favour of local resident Indian employee welfare and stock option trusts.

"We will be divesting up to a five per cent shares in favour of our bottlers," a Coca-Cola India official said.

He added that all the existing bottlers as well as some former bottlers have evinced interest and the final allotment will take place by February 28, which is the deadline for the completion of the divestment in HCCB.

The decision means that the remaining 34 per cent out of the total 39 per cent, which was to be divided among private investors and business partners, would now be placed with strategic and private investors.

The company official added that a couple of institutional investors have also evinced interest in picking up the stake. He, however, refused to divulge any further details.

Even the bottlers are keen to pick up a stake in the proposed divestment. Some of them had expressed interest even before the multinational beverage major formally announced its plans for a private placement.

The bottlers felt that since they were the existing franchisees of the beverage major, picking up a stake would mean a long-term partnership.

While Coca-Cola has 16 franchisee-owned bottling operations, there are around 33 company-owned bottling operations.

Most of the 16 operations are controlled by four business groups -- Moon Beverages in Delhi, the Ladhani group who owns bottling operation in Uttar Pradesh, the Kandharis who operate in Punjab and Goenkas of Kolkata.

Industry sources say that the Coimbatore-based sugar baron M Manneckam, who was one of the leading franchisee bottler and later sold out its operations to Coca-Cola, has also come forward to pick up a stake in the company.

Coca-Cola India had earlier announced its plans to privately place a 49 per cent equity in HCCB to resident Indian shareholders at a face value of Rs 10 per share.