Mexican firm buys 51% of Coca-Cola unit in PH for $688.5M

MEXICO-based global bottling giant Coca-Cola Femsa has signed a deal to acquire 51 percent of the country’s leading carbonated beverage-maker Coca-Cola Bottlers Philippines Inc. (CCBPI) for $688.5 million in cash.

“This is Coca-Cola Femsa’s first acquisition beyond Latin America and is seen as a vote of confidence in the strength of the Philippine economy and the opportunities it provides,” Coca-Cola Femsa said in a statement yesterday.

Coca-Cola Femsa, the biggest franchise bottler of Coca-Cola products in the world, bought the stake from beverage giant The Coca-Cola Co. (TCCC) of Atlanta.

The all-cash transaction is expected to close in early 2013. The deal gave the Philippine bottler an enterprise valuation of $1.35 billion for a 100-percent stake. Under the deal, Coca-Cola Femsa has the option to buy the remaining 49-percent of CCBPI within a seven-year period following the closing. The buyer has the “put option” to sell its ownership to The Coca-Cola Co. of Atlanta any time during sixth year.

CCBPI has 23 production plants and serves close to 800,000 customers. It is expected to sell about 530 million unit cases of beverages in 2012.  It has a 53.6-percent market share in the Philippine soft drinks industry and 30.1 percent of bottled water sales based on 2011 figures.

With the transaction, Coca-Cola Femsa seeks to leverage its “strong culture of social development, its proven know-how and operating capabilities” in the Philippines’ fast-growing, non-alcoholic beverage industry and its complex retail landscape. Coca-Cola Femsa will handle the day-to-day operations of CCBPI and, together with The Coca-Cola Co., expects to enhance the bottling operations and contribute to growth in the Philippine market.

“We see profitable growth prospects and long-term returns in emerging market economies. We welcome the unique opportunity to learn and share new capabilities to grow as an integrated company, as professionals and as men and women together with our communities. Our principles and values share a common ground with the Filipino community and we are sure that together we can extend Femsa’s long-lasting commitment to the continuous creation of economic, social and environmental value in every community where we operate,” said José Antonio Fernández Carbajal, Coca-Cola Femsa chair.

“This announcement reflects our long-standing belief in the global franchise system and our continued commitment to innovation and growth in the Philippines just as we have done over the last 100 years,” said Muhtar Kent, chair and chief executive of TCCC. “Our brands and our business have very deep roots in the Philippines and we look forward to working with our strong partners at Coca-Cola Femsa to capture future opportunities for growth and investment and bring even more social and economic value to customers and communities throughout the country.”

Coca-Cola has been present in the Philippines since the start of the 20th century and has been locally produced since 1912. The Philippines received the first Coca-Cola bottling and distribution franchise in Asia. TCCC, the world’s largest beverage marker, regained control of CCBPI from San Miguel Corp. in 2007.

Coca-Cola Femsa produces and distributes Coca-Cola, Fanta, Sprite, Del Valle and other trademark beverages of The Coca-Cola Co. in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil, and Argentina. The company has 60 bottling facilities and serves more than 2.5 million retailers with more than 100,000 employees worldwide.