Experts expect CCD to be put entirely on the block

Coffee Day Enterprises is in talks with Coca-Cola India and ITC for an “operational partnership” for the Café Coffee Day (CCD) chain, according to a purported letter that the chain’s founder and Coffee Day Group chairman VG Siddartha wrote before he went missing. Industry watchers and analysts said they expect CCD to be put entirely on the block because it had become untenable to run the organisation in the current situation.

Coffee Day Enterprises has called a board meeting on Wednesday to discuss the way forward, a top-level company insider said.

Coffee Day must sell CCD out if it wanted to keep the brand value intact at this time of uncertainty, said a coffee industry veteran, who asked not to be named. “There’s a lot of uncertainty in the business as of now but given its scale of operations, it is a very attractive buy for any large organisation looking at coffee or a PE firm with scale,” this person added.

Coca-Cola, which was in exclusive talks last month to acquire a significant stake in CCD, may be looking to revise its offer. Talks with ITC had begun after the exclusivity period with the American cola giant ended mid-July, another executive said.

“ITC is unlikely to go ahead, and Coca-Cola would be a key contender. Coca-Cola wants to hedge its bets and reduce dependence on its core soft drinks business which has slowed down, and is perhaps looking at global leadership in the coffee business,” this executive said.

Siddhartha was seeking a valuation of Rs 8,000-10,000 crore from Coca-Cola, this person said.

Coca-Cola didn’t comment on ET’s questions on deal talks.

ITC receives enquiries from market participants on an ongoing basis, which are suitably evaluated, a spokesperson for the diversified conglomerate said, adding: “One such enquiry was received from an intermediary on Cafe Coffee Day. However, no progress has been made on the matter.”

Jaspal Sabharwal, a former partner at private equity firm Everstone Capital and cofounder of online food insights platform TagTaste, said CCD might not be a right fit for a PE fund. “A new PE fund may not be up for this game but a large Indian non-strategic or a global strategic player with strong balance sheet could come forward,” he said. “It is exactly what Tech Mahindra did when Satyam collapsed.”

Meanwhile, the company insider cited earlier said at Wednesday’s board meeting, Siddhartha’s wife and the directors would discuss and take a call on what next to do. “It will be the family’s decision to keep the company or sell it and nothing is decided yet,” he said.

A board meeting was held on Tuesday as well, but was inconclusive as most members could not attend it, this person added. A senior executive at Coffee Day Enterprises said Siddhartha’s wife and son were holding the reins in his absence.

Source:-https://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/experts-expect-ccd-to-be-put-entirely-on-the-block/70458743