MANILA, Philippines (UPDATED) – Coca-Cola Bottlers Philippines Inc. (CCBPI) will soon be under the control of Coca-Cola FEMSA S.A.B. de C.V., the Mexico-based largest independent Coca-Cola bottler in the world.
In a statement on Friday, December 14, CCBPI announced that its parent, Atlanta-based The Coca-Cola Company, has signed a definitive agreement to sell its 51% stake in the Philippine unit to Coca-Cola FEMSA.
The deal is worth US$688.5 million and will be paid in cash. It provides Coca-Cola FEMSA an option to acquire the 49% stake within 7 years of the deal’s close, as well as the option to sell the Philippine bottler back to the latter’s US parent The Coca-Cola Co. after 6 years.
The deal, expected to be completed in early 2013, is seen as a “vote of confidence” on the Philippine economy, which grew 7.1% in the 3rd quarter, one of the fastest in the world.
This marks the latest in a series of ownership changes at CCBPI, as well as Coca-Cola FEMSA’s first acquisition beyond Latin America. The Mexican firm first announced its intention to acquire a stake in the Philippine operations in February.
“The Philippines’ market has one of the highest per capita consumption rates of Coca-Cola products in the region and presents significant opportunities for further growth,” Coca-Cola FEMSA said in a briefing paper.
“The Philippines provides a unique opportunity to operate in a country with very attractive economic growth prospects, a private consumption-driven economy, an attractive socio-economic and demographic profile, and a cultural resemblance to Latin America,” it added.
It said it expects the population of the Philippines to grow at twice the rate of Mexico and Brazil for the next 40 years, during which a large middle class in the now still-economically struggling nation would emerge.
It noted that food and non-alcoholic beverages account for 42% of private consumption in the Philippines.
It also described the Philippines as a market that has “fast growing non-alcoholic beverage industry” with a “complex retail landscape.”
The Mexico-based bottler will take over the day-to-day operations, as well as “enhance the bottling operations,” of the Philippine unit, the country’s leading softdrinks retailer.
CCBPI has 23 production plants and serve around 800,000 customers nationwide, and targets to sell about 530 million unit cases of beverages in 2012.
CCBPI has been operating in the Philippines since the start of the 20th century and has been locally producing Coca-Cola products since 1912. The Philippines was the first Asian country to have a Coca-Cola bottling and distribution franchise.
The Mexican bottler said it will “leverage its strong culture of social development, its proven know-how and operating capabilities in the Philippines.”
The Philippine bottler was acquired by The Coca-Cola Company from local conglomerate San Miguel Corp. in 2007, at the time the when San Miguel was preparing to diversify its food and drinks portfolio.
San Miguel in 1997 exchanged its 70% stake in CCBPI for a 25% stake in Australia-based Coca-Cola Amatil Limited, which had operations in Asia Pacific and Eastern Europe.
After Amatil reorganized its global operations and spun off its UK-based unit, San Miguel joined forces with Coca-Cola Company to reacquire CCBPI with San Miguel taking a 65% stake and Coca-Cola Company the remaining 35%. San Miguel also eventually merged its controlling stake in CCBPI’s rival, Cosmos Bottling Corp, which specialized in low-priced soft drinks, into CCBPI, giving San Miguel 90% control of the local soft drinks market.
When San Miguel sold all its 65% stake in CCBPI to the Coca-Cola Company in 2007, the deal was worth $590 million.
The Coca-Cola FEMSA deal now values the local bottler at $1.35 billion, the Mexican firm said.
The Philippine bottler is expected to post 2012 sales of $1.1 billion, it added.
Coca-Cola FEMSA said it would finance the purchase with short- and medium-term bank loans.
The Mexico-based firm is the world’s largest publicly-listed bottler of Coca-Cola products, with operations across Central- and South America. – Rappler.com