SABMiller, Coca-Cola merge African bottling arms
Brewer SABMiller, Coca-Cola and the South African Gutsche family have agreed to combine their non-alcoholic bottling operations in southern and eastern Africa, a $2.3bn deal long rumoured to be in the offing.
The new combined bottler, Coca-Cola Beverages Africa, will operate in 12 countries that account for about 40 per cent of all of Coca-Cola’s volumes in Africa, employ over 14,000 people across more than 30 bottling plants and have gross assets of about $2.3bn.
Coke has been reviewing its bottling operations and South African brewer SABMiller has wanted to expand in the soft drinks space, so the agreement makes sense.
The South African brewer’s chief executive Alan Clark said in the statement:
“Soft drinks are an important element of our growth strategy. This transaction increases our exposure to the total beverage market in Africa. The opportunity is significant, with favourable demographics and economic development pointing to excellent growth prospects.“
The merged company will be owned 57 per cent by SABMiller, 31.7 per cent by the Gutsche family’s investment office (which is a majority owner of Coca-Cola Sabco, the local bottling unit) and 11.3 per cent by Coca-Cola.
The assets being transferred by Coca-Cola and the Gotsche family have been valued at $1.5bn, and have an approximate pre-tax profit of $188m.
As part of the deal, Coke will get SABMiller’s Appletiser brands globally, and acquire or be licensed rights to a further 19 non-alcoholic drinks in Africa and Latin America, for about $260m in cash.
SABMiller will keep its ownership of non-alcoholic malt beverages in Africa and Latin America, and retain its Coke franchises in El Salvador and Honduras.
Muhtar Kent, Chairman and CEO of The Coca-Cola Company, said:
“A combined Coca-Cola bottling operation is further evidence of our commitment to Africa, and our firm belief in the tremendous growth prospects that the continent offers. As one of the top 10 largest Coca-Cola bottling partners worldwide, Coca-Cola Beverages Africa can leverage the scale, resources, capability and efficiency needed to accelerate Coca-Cola growth and contribute to the economic and social prosperity of African communities.“
Phil Gutsche, chairman of Gutsche Family Investments (and soon to be chairman of Coca-Cola Beverages Africa) said:
“Our family sees this merger as an important and logical step to enable Coca-Cola Beverages Africa to optimise the opportunities for development in the rapidly-evolving Africa beverage market. We are very excited about the opportunity and are totally committed to ensuring that Coca-Cola Sabco’s distinctive culture is successfully integrated with that of our new partners in order to create an even more successful business in the future.”
Source: FT – SABMiller, Coca-Cola merge African bottling arms
