Coke Makes Deal for African Bottler -- WSJ
December 22 2016 - 3:02AM
Dow Jones News
Beverage company to pay $3.15 billion to AB InBev for control,
then seek new partner
By WSJ Staff
Coca-Cola Co. has agreed to buy a 54.5% stake in Coca-Cola
Beverages Africa, the soft-drink company's largest African bottling
business, from Anheuser-Busch InBev SA for $3.15 billion.
Coke said in October that it planned to exercise a
change-of-control clause for the business, which it plans to
refranchise to another partner, after AB InBev got control of the
stake when it bought SABMiller PLC.
The Atlanta-based company wants to keep AB InBev at arm's length
following speculation that it could become a future takeover target
for the beer giant. AB InBev is also a major bottler of
nonalcoholic drinks in Latin America for PepsiCo Inc., Coke's
longtime rival.
For AB InBev, the deal represents its latest asset sale since
its $100 billion-plus takeover of rival SABMiller, for which it won
regulatory approval a few months ago.
Coca-Cola Beverages Africa is based in South Africa and has
operations, including more than 30 bottling plants, in 10 countries
across southern and eastern Africa. Coke and South Africa-based
Gutsche Family Investments, another longtime bottling partner, own
the rest of the business.
Coke and InBev also announced Wednesday that they had reached an
agreement for the soft-drinks company to separately buy the
brewer's interest in bottling operations Zambia, Zimbabwe,
Botswana, Swaziland, Lesotho, El Salvador and Honduras for an
undisclosed amount. Coke also plans to refranchise those operations
and expects both deals with AB InBev to close by the end of
2017.
Coke CEO Muhtar Kent said the company was in talks with a number
of parties who are interested in the bottling businesses and would
seek to refranchise the operations as soon as it had won regulatory
approval.
The U.S. drinks maker has been divesting manufacturing and
distribution assets world-wide, as part of an "asset light"
strategy to focus on its more profitable concentrate business as
soda consumption is slowing.
Industry analysts have flagged European-based Coca-Cola European
Partners PLC and Coca-Cola Hellenic Bottling Co. or Mexico's
Coca-Cola Femsa SAB as being among potential partners in Africa.
Coke has hundreds of bottling partnerships around the world.
AB InBev will continue to have some interest in Coca-Cola
bottling operations. The brewer's takeover of SABMiller also gives
it a 20% stake in France's Castel Group, which bottles Coke
products in more than a dozen African countries, including Algeria
and Tunisia.
Coca-Cola typically insists on change-of-control clauses with
its bottling partners, giving it the right to buy out a partner's
share if it is acquired by someone else.
Rothschild is advising Coca-Cola on the deal while Lazard is
advising AB InBev.
--
Mike Esterl
, Tripp Mickle and Ben Dummett contributed to this article.
(END) Dow Jones Newswires
December 22, 2016 02:47 ET (07:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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