Indian tobacco company ITC Ltd. is considering acquiring a stake in Bengaluru-based coffee chain Coffee Day Enterprises Ltd. in a bid to diversify its business, Bloomberg News reported Aug. 21, citing people with knowledge of the matter.
The talks are still at an early stage and a formal deal may not materialize, the news wire said.
In June, it was reported that soft drink giant Coca-Cola Co. is in private talks with the coffee restaurant company for a potential stake acquisition.
Coffee Day operates around 1,700 stores across India, which is about 10 times more than what Starbucks Corp. has in the South Asian country, Bloomberg said, citing data from the National Restaurant Association of India.
If the talks come to fruition, the deal will allow the maker of Classic and Gold Flake cigarettes to broaden its business as India hikes taxes on tobacco products and tightens regulations on smoking in public places, according to the report.
ITC has been given access to Coffee Day's assets and financial books for due diligence, the news outlet added. An ITC spokesperson told Bloomberg that it received an inquiry from an intermediary on Coffee Day and there has been no progress.
Meanwhile, Coffee Day reportedly denied being aware of such developments.
ITC and Coffee Day did not immediately respond to S&P Global Market Intelligence's requests for comment.
