A team from Baker McKenzie in Johannesburg acted for Varun Beverages Limited in its acquisition of a 100 percent stake in the Beverage Company (Proprietary) Ltd, South Africa, and its wholly owned subsidiaries (Bevco Group), with an option to accept minority co-investment from large equity funds, subject to regulatory and other approvals, from a consortium led by Ethos and Nedbank. Signed on 20 December 2023, this South African transaction is valued at around ZAR 2.9-billion and is expected to be finalised in July 2024. The sale and purchase agreement of this transaction was unique from a South African law perspective in that it was neither a completion accounts mechanism nor a locked-box transaction, but rather a hybrid construct.

India-based Varun Beverages Limited, a key player in the beverage industry, manufactures, bottles and distributes beverages and is the largest franchisee of PepsiCo in the world, outside the United States. It bottles and distributes PepsiCo’s beverages in 27 states and seven union territories in India. It also holds the franchise for PepsiCo products in territories in Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe. 

Bevco manufactures and distributes licensed, own-branded, non-alcoholic beverages in South Africa, with franchise rights from PepsiCo Inc. in South Africa, Lesotho and Eswatini and distribution rights in Namibia and Botswana. It has five manufacturing facilities: two in Johannesburg and one each in Durban, East London and Cape Town.

The transaction required a cross-practice team of experts from Baker McKenzie Johannesburg, led and coordinated by the Corporate/M&A Practice Co-Head and Partner, Lydia Shadrach-Razzino. The team included Competition Practice Head and Managing Partner Lerisha Naidu, Director Designates Angelo Tzarevski (Competition) and Denny Da Silva (Tax), Senior Associate Kaylea Sher-Fisher (Corporate M&A) and Associates Basanda Maluleka (Corporate M&A) and Tsanga Mukumba (Tax).

Lead partner Lydia Shadrach-Razzino noted, "We are proud to have advised on this significant transaction in the consumer goods and retail sector in South Africa. This transaction will enable Varun Beverages to further expand its operations into Africa by entering Africa’s largest beverage market, South Africa. The transaction comes with significant benefit to South Africa, as Varun Beverages (being beverage industry experts) brings a much-needed wealth of experience to the sector, which will have a positive impact on both the sector and the South African economy. The transaction is also reflective of investor confidence in the South African market at a time when it is much needed.”