BUSINESS

Pepsi given go ahead to acquire a franchisee

NEW DELHI JAN. 3 . The Government is believed to have given the go ahead to cola giant Pepsico to acquire one of its franchisees by bringing overseas funds while making it mandatory on the softdrink conglomerate to divest 49 per cent equity in the same within five years.

Pepsico India Holdings, with an approved foreign equity of $405 million, had approached the Foreign Investment Promotion Board (FIPB) to acquire operations of Dhillon Kool Drinks and Beverages Ltd through its subsidiary Aradhana Soft Drink Company on the ground the franchisee was facing `enormous financial crisis.'

The FIPB is understood to have cleared the proposal late last month and sent the same for approval to the Commerce and Industry Minister.

Sources said that clearance was subject to the condition that the acquisition should be funded through FDI and not through domestic debt and that 49 per cent of the equity be divested in it within five years.

In its application to the FIPB, Pepsico India had proposed to take over Haryana and Himachal Pradesh business and assets of Dhillon Kool Drinks and Beverages Ltd, its franchisee.

Pepsico's current total direct and indirect equity holding in Dhillon Kool drinks is 26 per cent which will be raised to 100 per cent. Pepsico holds 49 per cent equity in Aradhana Soft Drinks while the balance is held by Aradhana Snack Food Company.

The sources said the company in its proposal had stated that its stake would be diluted to 51 per cent within five years from the date of acquisition.

The Department of Economic Affairs and the Administrative Ministry of Food Processing had also given their consent to the proposal, subject to FDI and dilution of equity to 49 per cent within five years.

PTI

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