OYO in talks to buy significant stake in Cafe Coffee Day

Café Coffee Day, a subsidiary of Coffee Day Enterprises Limited has got irresistible attention from five bidders who seek to acquire stakes in the company after its delayed announcement of Q2 results (The company's total debt as of August 17 stood at around Rs 4,970 crore). Two of the five bidders who recently joined the race are Oyo (Hotel aggregator) and Apax partners (British Private Equity Firm). Both have signed nondisclosure agreements (A contract between two parties containing confidential information).

The bidders who were present earlier are KKR, TPG Capital and Bain Capital. The evaluations and negotiations of potential bidders have already begun. This assessment will surely involve considering thoughts behind the acquisition of stakes. Well, evidently Oyo seems to make a strategic investment to expand its recently opened coffee chain- The French Press. Presently, there are two operational outlets in Delhi and Bengaluru. The SoftBank-backed Oyo has many advantages through this acquisition as CCD has already established outlets across 200 cities. These outlets function in different models such as franchise models, rented premises and company-owned areas.

It is also being said that there would be a division of 1600 outlets into different categories and it will be named according to the locations in which has its presence. This division is estimated to pave a way for operational clarity. 

Other bidders who have proposed interest in buying stakes might only focus on the Brand name and the expansion of CCD’s operations. 

All that being said, initial proposals were made to Tata Group, which runs the Starbucks franchise in India, and the Jatia family, which operates McDonald’s chain in the west and south India, ITC and Coca-Cola. Unfortunately, they did not want to join hands with CDEL.