MANILA, Philippines —Conglomerate Aboitiz Equity Ventures Inc. (AEV) will complete the acquisition of a 40-percent stake in Coca-Cola Beverages Philippines Inc. by the end of February this year, further diversifying its holdings that include power plants and banks.
AEV is investing P40 billion in the company while partner Coca-Cola Europacific Partners Plc. will buy the remaining 60 percent for roughly P60 billion from US-based The Coca-Cola Co.
The P272-billion Philippine conglomerate, which will pay the sum in cash upon closing, said on Wednesday it secured the approval of the Philippine Competition Commission to pursue the acquisition.
READ: Aboitiz buys 40% of Coca-Cola PH
The deal will “build on AEV’s portfolio diversification strategy to enter the branded consumer goods spaces,” AEV said in a stock exchange filing.
Coca Cola Philippines is the leading beverage supplier in the Philippines, with a supply chain footprint consisting of 73 production lines and 19 plants.
Coca Cola Philippines’ latest financial statements showed revenues of almost P95 billion and a net income of P2.2 billion in 2022.
Nicky Franco, head of research at stock brokerage house Abacus Securities, said Coca Cola Philippines is a “good” long-term bet on the sector.
“2022 was a low base because of sugar availability issues at the time,” Franco, who listed AEV as one of his stock picks in 2024, said on Wednesday.
Business prospects
He also expected more profit upside for Coca Cola Philippines as sugar prices fall and production is expected to normalize this year.
“[I]f the commodity stays largely at current levels, the boost from lower prices should be a big boon to [Coca Cola Philippines’] profitability from 2024 onwards,” Franco said in a Jan. 15 report to clients.
“This will be further boosted by lower inflation and hotter weather because of El Niño. So despite taking on more debt for the acquisition, Coke should be immediately accretive for Aboitiz,” he added.
Coca-Cola’s products have been sold in the country since the beginning of the 20th century and was locally produced since 1927. It owns carbonated beverage brands such as Coca-Cola, Royal and Sprite.
AEV, which owns Aboitiz Power, Union Bank of the Philippines, and Pilmico Foods, has also been aggressively expanding its consumer and infrastructure holdings over the past two years.
READ: UnionBank completes takeover of Citi PH’s retail business
In 2022, UnionBank completed the P72-billion takeover of Citi Philippines assets. That same year, AEV announced the acquisition of the Mactan Cebu International Airport project for P25 billion.