Coca-Cola to Divest Itself of China Bottling for Roughly $1 Billion
November 17 2016 - 11:00PM
Dow Jones News
Coca-Cola Co. said Thursday it reached a definitive agreement to
divest its bottling stakes in China for roughly $1 billion, part of
broader strategy to focus on its more profitable concentrate-making
business.
The beverage giant currently owns roughly a third of its
bottling in China, with the rest split roughly between Swire
Beverage Holdings Ltd. and China Foods Ltd. China Foods is part of
state-owned COFCO Ltd.
Under the agreement, Swire and China Foods each will own roughly
half of Coke's bottling operations in the Asian country.
Atlanta-based Coke announced a tentative agreement in February to
divest to the two partners.
Coke is in the midst of a global divestment drive and has been
selling plants, warehouses and delivery trucks to bottling partners
in a bid to cut costs amid slowing soda sales. The biggest
divestment is in the U.S., where it has struck agreements to divest
more than half of its bottling and plans to sell the remainder by
the end of 2017.
Coke estimated earlier this year that its direct employees will
shrink to 39,000 from 123,000 after it completes divesting bottling
in North America, China, Germany and South Africa. Net revenue will
drop to $28.5 billion from $44.3 billion but capital expenditures
will be halved to $1.3 billion, based on 2015 figures.
China is Coke's third-largest market by volume. The company and
its bottling partners recently opened their 45th plant in the
country and are in the midst of a $4 billion investment push.
The divestment in China remains subject to regulatory
approvals.
Write to Mike Esterl at mike.esterl@wsj.com
(END) Dow Jones Newswires
November 17, 2016 22:45 ET (03:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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