Highlights
- Varun Beverages' Kenya subsidiary agreed to acquire a beverage business for USD 32 million.
- The transaction includes dairy beverages, juices and packaged drinking water operations in Kenya.
- The acquisition is expected to be completed on or before August 1, 2026.
Varun Beverages Limited (NSE:VBL) informed the stock exchanges that its wholly-owned subsidiary, VBL Industries (Kenya) Limited (VBL Kenya), has entered into a Business Transfer Agreement with Devyani Food Industries (Kenya) Limited (DFIL Kenya) to acquire its value-added dairy beverages, juices and packaged drinking water business. The acquisition will be completed for a consideration of USD 32 million (approximately Rs. 3,050 million), based on an exchange rate of USD 1 = Rs. 95.30.
According to the company, the acquisition is intended to deepen VBL's presence in Kenya and the broader East African region by utilizing DFIL Kenya's manufacturing infrastructure and distribution capabilities.
Source: Analysis by Kalkine
Transaction Includes Manufacturing Assets
The acquisition covers the beverage business together with all assets associated with it as a going concern. The manufacturing facility is located in Nakuru, Kenya, on a 52-acre land parcel with a built-up area of approximately 17,500 square metres.
According to the company, the facility manufactures value-added dairy beverages, juices and packaged drinking water. It is equipped with infrastructure including a reverse osmosis (RO) plant, boiler, effluent treatment plant, diesel generator set and air compressor. The company also stated that the facility has certifications including Food Safety System Certification (FSSC) 22000 and ISO 9001:2015.
Completion Expected by August 2026
Varun Beverages stated that the transaction is expected to be completed on or before August 1, 2026, subject to the terms of the agreement.
The company also disclosed that VBL Kenya is preparing to launch a range of carbonated soft drinks, following the acquisition of the business and manufacturing infrastructure.
Related Party Transaction at Arm's Length
The company clarified that DFIL Kenya is a promoter group company, while VBL Kenya is a wholly-owned subsidiary of Varun Beverages. As a result, the acquisition qualifies as a related party transaction.
However, Varun Beverages stated that the transaction has been undertaken on an arm's length basis. The company also confirmed that it does not hold any shareholding in DFIL Kenya.
Key Risks
- Transaction completion remains subject to agreed closing conditions.
- Integration of acquired operations may take time.
- Regulatory and operational approvals may affect timelines.
- Currency fluctuations may influence transaction value in rupee terms.
Summary
Varun Beverages' wholly-owned subsidiary, VBL Kenya, has agreed to acquire the value-added dairy beverages, juices and packaged drinking water business of Devyani Food Industries Kenya for USD 32 million (about Rs. 3,050 million). The transaction includes a manufacturing facility in Nakuru and is expected to close on or before August 1, 2026, subject to the agreement.
FAQs
Q: What business is Varun Beverages acquiring in Kenya?
A: VBL Kenya is acquiring the value-added dairy beverages, juices and packaged drinking water business of DFIL Kenya.
Q: What is the value of the acquisition?
A: The transaction is valued at USD 32 million, equivalent to approximately Rs. 3,050 million.
Q: When is the acquisition expected to be completed?
A: The company expects the transaction to be completed on or before August 1, 2026, subject to the agreement's terms.