Hindustan Times (Ranchi)

ITC WEIGHS BUYING STAKE IN COFFEE DAY

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MUMBAI: ITC Ltd is considerin­g a bid to buy a stake in Coffee Day Enterprise­s Ltd as the nation’s biggest cigarette maker seeks to diversify its businesses, according to people familiar with the matter.

The maker of Classic and Gold Flake cigarettes has been given access to Coffee Day’s assets and financial for due diligence, said the people, who asked not to be identified as the discussion­s are private.

ITC could be vying with CocaCola Co., which has evaluated India’s biggest cafe chain but hasn’t made a formal offer, said one of the people.

Shares of ITC closed 2.01% lower in Mumbai on Wednesday, while Coffee Day rose 4.97%, extending its three-day winning streak to almost 16%.

A successful bid will help ITC further diversify its business to reduce dependence on cigarettes as India raises taxes on tobacco and restricts smoking in public places.

Coffee Day is under pressure to pare borrowings after its founder VG Siddhartha took his own life as debt strains began to emerge in his companies.

Deliberati­ons are at preliminar­y stage and may not lead to a formal offer, according to the people.

ITC received an inquiry from an intermedia­ry on Coffee Day and there has been no progress, its spokesman said in response to Bloomberg query.

Coffee Day declined to comment.

Coffee Day has about 1,700 outlets, ten times more than what Starbucks Corp. runs in the world’s second most populated country, according to the National Restaurant Associatio­n of India.

A unit of private equity firm KKR & Co. owns 6.07% of the company.

Standard Chartered Private Equity holds 5.7%, while Nandan Nilekani, co-founder of Infosys Ltd, has a 2.69% stake.

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