MUMBAI/NEW DELHI: Tata Group, India’s biggest conglomerate, and Jubilant Food-Works (which owns the franchise for Domino’s and Dunkin’ Donuts in India), are weighing a bid for Coffee Day Group’s hot beverage vending machine business, said people with knowledge of the matter.
The beleaguered Coffee Day Group is seeking Rs 2,000 crore for the business, which has piqued the interest of marquee global private equity funds too.
Tata Group is considering doing any potential deal through its listed entity Tata Consumer Products, which has emerged as the third most valuable company in the $113-billion conglomerate after TCS and Titan. The sale has drawn the interest of Warburg Pincus, Goldman Sachs and Blackstone too, said the sources. Any transaction will be an addition to the $32.6-billion merger and acquisition deals involving an Indian target and announced since April 1, 2020, Refinitiv data showed.
A spokeswoman for Tata Consumer said the company “evaluates various opportunities on an ongoing basis” and declined to comment any further. A representative for Jubilant FoodWorks did not respond to requests for comments, while Warburg Pincus, Goldman Sachs and Blackstone could not be contacted immediately.
Earlier this year, Blackstone — along with a local real estate developer — had bought Coffee Day Group’s office park in Bengaluru for Rs 2,700 crore. The hot beverage vending machine business is housed under Coffee Day Global, a 90% subsidiary of the listed Coffee Day Enterprises, whose shares are suspended from trading by the markets regulator after it missed filing its financial results within the prescribed time.
The Coffee Day Group has been selling assets to repay lenders after the sudden death of founder V G Siddhartha last year. The people said that discussions have been on with potential suitors for the vending machine business and Coffee Day Group’s adviser MAPE plans to call for expression of interests soon.
“Coffee Day is looking to induct strategic and financial partners into multiple businesses as part of an ongoing restructuring exercise,” its spokesperson said. “To this end, there are several ongoing discussions. None of these conversations have reached any conclusive stage.”
Coffee Day had earlier sought a price of Rs 3,000 crore for the vending machine business, but lowered it later in light of the unit (corporate customers account for bulk of the business) being hit by office attendance rules triggered by Covid-19. The group will have to demerge the vending machine business from Coffee Day Global and then sell to the potential acquirer as the company houses other retail businesses too.
The potential deal comes as Tata Consumer plans to ramp up its food and beverage portfolio. It had recently acquired the packaged products unit of sister concern Tata Chemicals. It also runs a coffee chain in partnership with Starbucks. “The Tatas have the supply chain and raw material in place for the coffee business because of their plantations. In the meanwhile, they have gained significant experience on the retail side because of their association with Starbucks,” said Arvind Singhal, founder of retail consultancy, Technopak. “There is an opportunity in the country for this business, and the Tatas can do justice to it due to their expertise and financial muscle — the latter was missing from Coffee Day.”