Varun Beverages' growth strategy could prove beneficial for investors

The VBL board approved the acquisition of SBC Tanzania for Rs 1,304 crore and SBC Beverages Ghana for Rs 127 crore

Varun Beverages (VBL) has increased its Africa presence with acquisition of two major beverage companies, and completed acquisition of remaining stake in a third entity.

 

The VBL board approved the purchase of SBC Tanzania for Rs 1,304 crore and SBC Beverages Ghana for Rs 127 crore. These own manufacturing/distribution rights for NARTD (PepsiCo branded) beverages in Tanzania and Ghana.

 

The acquisitions will help VBL gain ground in East and West Africa. It already had rights for much of southern Africa. The Tanzanian acquisition comes at a trailing multiple of 1.2x (Enterprise Value (EV)/sales), given dominant share (RMS) of Pepsico (56