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OYO Planning to Buy A Majority Stake In Cafe Coffee Day (CCD)

Pritish raj by Pritish raj
November 25, 2019
in News, Retail
3 min read
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OYO CCD- Next Big Brand

OYO CCD- Next Big Brand

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  • SoftBank-backed hospitality chain Oyo and British private equity firm Apax Partners joined the race to buy a significant stake in Café Coffee Day (CCD), according to two people close to the growth.
  • All Oyo and Apax signed NDAs with Coffee Day Enterprises (CDEL) and started negotiations to buy CCD. As well as signing similar agreements with CDEL, KKR, TPG Capital and Bain Capital are in the race to buy CCD.

SoftBank-backed hospitality chain Oyo and British private equity firm Apax Partners joined the race to buy a significant stake in Café Coffee Day (CCD), according to two people close to the growth.

All Oyo and Apax signed NDAs with Coffee Day Enterprises (CDEL) and started negotiations to buy the coffee business of the firm.
As well as signing similar agreements with CDEL, KKR, TPG Capital and Bain Capital are in the race to buy CCD.

The first of the two people mentioned above said all bids were reviewed and the board of the company had started negotiations with at least two of the stakeholders. “Five bids have been made and all are being evaluated, but only after a few days will we get some clarity.

The above-mentioned person added that some of those bidding were only interested in buying the CCD product, while others were also interested in some of the current operations ‘ other functions.

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Oyo is the only strategic shareholder to have submitted a bid — in a related line of business.

A coffee chain was introduced by the group in August–The French Press. SoftBank-backed Oyo has been looking for some time to grow in the café market, and CCD’s already developed outlets across 200 cities could be a big boost, the second person informed the proposals.

“Approximately 1,600 outlets could be divided into different categories. Those in prime locations might have one brand name, while those in the smaller towns might be re-branded’ CCD Lite’ or something like that, “the second executive said.

This person said it would also help with organizational transparency to separate CCD outlets into different categories, allowing the company to decide whether to shut down some of the outlets.

CCD works through cities across various models. While the company owns some of the stores, others are located in leased premises, the second person said the exercise was aware of.
“There are cafes operating on a franchise model as well. A call on the buyer to monetize and operationalize all these various cafes will have to be made, “he said.

The involvement of Oyo in the cafe industry is allegedly through a relationship with another coffee chain and a franchise. There are currently two operational Oyo cafes in Delhi and Bengaluru and, according to local media reports, the company was looking to launch 12 other cafes in the coming months.

Oyo also runs Adraq and O’Biryani, both of which are kitchen brands, and could also look to expand them. The company is looking to expand in the food segment, and CCD may be an added benefit to the hospitality chain.

The selling may not be an easy one, to be sure, and some of the major players have stayed away from CCD.

Before the bids, the CDEL board had approached the Tata Group, which operates the Starbucks franchise in India, and the Jatia family, which operates McDonald’s chain in western and southern India, but these parties were not interested in pursuing the talks, said people aware of the earlier rounds of discussions.

The board also contacted ITC and Coca-Cola, who agreed to split the coffee business into a separate entity prior to any potential deal. Neither ITC nor Coca-Cola, which operates Costa Coffee, took part in the auction.

The board is expected to speed up talks with potential investors once the former CBI official Ashok Kumar Malhotra’s investigation report is submitted.

Tags: CCD DebtsCCD FounderOyo Rooms
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Pritish raj

Pritish raj

Pritish Raj is a content writer at Next Big Brand. Hailing from the diversified state of Bihar, he is an engineer by education who chooses the way of poetry, photography, and writing to kick off his career. Highly enthusiastic about brands and startups, he aims to be a travel content creator.

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