Coca-Cola and SABMiller Deal

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Coca-Cola and SABMiller Deal

Coca-Cola Company and Global Beer Firm, SABMiller Group, Have Agreed to Combine the Bottling Operations of Their Non-alcoholic Ready-to-drink Beverages, a Move that is Likely to Strengthen Rwenzori Water Further

TheCoca-ColaCompany (NYSE:KO), SABMiller plc (LSE:SAB, JSE:SABJ) and Gutsche Family Investments (GFI, majority shareholders inCoca-ColaSabco) have agreed to combine the bottling operations of their non-alcoholic ready-to-drink beverages businesses in Southern and East Africa. The new bottler,Coca-ColaBeverages Africa, will serve 12 high-growth countries accounting for approximately 40 per cent of allCoca-Colabeverage volumes in Africa.

Africa offers significant growth potential in beverages, underpinned by rising personal disposable income, a fast-growing population and increasing per capita consumption. With more than 30 bottling plants and over 14,000 employees,Coca-ColaBeverages Africa will be the largest Coca‐Cola bottler on the continent, with the scale, complementary capabilities and resources to capture and accelerate top-line growth. This will also allow the new African bottler to develop best operating practices and invest in production, sales and distribution, and marketing to benefit from growing demand and drive profitability.

With a shared vision, extensive experience of operating in African markets, and long-term commitment to the continent,Coca-ColaBeverages Africa will be strongly positioned to offer consumers greater choice, broader availability and better value. The new bottler will continue the shareholders' strong commitment to the economic and social development of the communities it serves, which includes providing access to clean water, supporting women's economic empowerment and promoting wellbeing.

On full completion of the proposed merger, shareholdings inCoca-ColaBeverages Africa will be SABMiller: 57.0%, Gutsche Family Investments: 31.7% and TheCoca-ColaCompany: 11.3%.

"A combinedCoca-Colabottling operation is further evidence of our commitment to Africa, and our firm belief in the tremendous growth prospects that the continent offers," saidMuhtar Kent, Chairman and CEO of TheCoca-ColaCompany. "As one of the top 10 largestCoca-Colabottling partners worldwide,Coca-ColaBeverages Africa can leverage the scale, resources, capability and efficiency needed to accelerateCoca-Colagrowth and contribute to the economic and social prosperity of African communities."

"Soft drinks are an important element of our growth strategy. This transaction increases our exposure to the total beverage market in Africa. The opportunity is significant, with favourable demographics and economic development pointing to excellent growth prospects," said Alan Clark, SABMiller Chief Executive. "This also signifies a strengthening of our strategic relationship with TheCoca-ColaCompany."

Phil Gutsche, Chairman of Gutsche Family Investments (GFI), said, "Our family sees this merger as an important and logical step to enableCoca-ColaBeverages Africa to optimise the opportunities for development in the rapidly-evolving Africa beverage market. We are very excited about the opportunity and are totally committed to ensuring thatCoca-ColaSabco's distinctive culture is successfully integrated with that of our new partners in order to create an even more successful business in the future."

Details of the transaction

In a transaction to be completed in two phases,Coca-ColaBeverages Africa will bring together:

Coca-ColaBeverages Africa will initially produce and distributeCoca-Colabeverages in nine countries: South Africa, Kenya, Ethiopia, Mozambique, Tanzania, Uganda, Namibia, Comoros and Mayotte.

SABMiller intends to include at a later date its Swaziland soft drinks business and those of its listed subsidiaries in Botswana and Zambia, subject to agreement in due course with those subsidiaries and the requisite regulatory and shareholder approvals.

Phil Gutsche will be Chairman ofCoca-ColaBeverages Africa and Port Elizabeth, South Africa is the intended location for the company's headquarters.

As part of the transaction, TheCoca-ColaCompany will also acquire SABMiller's Appletiser brands on a worldwide basis, and acquire or be licensed rights to a further 19 non-alcoholic ready-to-drink brands in Africa and in Latin America, for an approximate cash consideration of US$260m. SABMiller will retain ownership of its non-alcoholic malt beverages in Africa and Latin America and will retain itsCoca-Colafranchises in El Salvador and Honduras.

Phases of the transaction and closing conditions

In Phase I:

In Phase II:

Completion of Phase II is subject to a number of customary closing conditions, including regulatory approvals and requisite shareholder approvals, and is expected to complete 12-18 months after the completion of Phase I.

Source: The Coca Cola Company

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