UPDATE 1-India's Varun Beverages to enter S. Africa with $159 mln deal

(Adds background, details on deal from paragraph 2 onwards)

BENGALURU, Dec 19 (Reuters) - Pepsi India bottler Varun Beverages said on Tuesday it will buy South Africa-based The Beverage Company in a deal valued at 13.2 billion rupees ($158.71 million), enabling it an entry into Africa's largest market.

The Beverage Company bottles and distributes PepsiCo-branded non-alcoholic beverages in South Africa and has five manufacturing facilities in the country, in addition to operations in Lesotho, Eswatini, Namibia, and Botswana.

Varun Beverages, one of PepsiCo's largest franchisees outside the United States, has the provision to accept minority co-investment from a "large equity fund", it said in a filing.

The company has over 30 manufacturing units in India, packaging and distributing beverages under the Pepsi, Mirinda and Tropicana labels.

The deal is expected to be completed on or before July 31. 2024, subject to regulatory approvals.

Shares of Varun Beverages closed 3.5% higher on Tuesday ahead of the announcement.

The Gurugram-based firm also signed a memorandum of understanding with the Jharkhand government on Tuesday to set up a manufacturing plant in the state, with a capital expenditure of 4.5 billion rupees.

($1 = 83.1725 Indian rupees) (Reporting by Navamya Ganesh Acharya in Bengaluru; Editing by Janane Venkatraman)