Coca-Cola Co. said Monday that it would exercise a change-of-control clause, allowing it to acquire SABMiller PLC’s former interest in the soft-drink company’s largest African bottling company.
The move comes after Anheuser-Busch InBev NV on Monday closed its acquisition of SABMiller to create a beer behemoth with a large African footprint. As of late August, SABMiller had a 54% stake in Coca-Cola Beverages Africa, which distributes about 40% of Coke’s volumes in the continent.
Atlanta-based Coke wants to keep AB InBev at arm’s length amid speculation the Belgian beer giant eventually could try to acquire Coke. AB InBev also is a major bottler of nonalcoholic drinks in Latin America for PepsiCo Inc., Coke’s longtime rival.
“While the company respects [AB InBev’s] capabilities, it has a number of existing partners who are highly qualified and interested in these bottling territories,” Coke said in a company announcement.
Coke has been divesting manufacturing and distribution assets world-wide, part of an “asset light” strategy to focus on its more profitable concentrate business at a time when 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.
A Coke spokesman declined to comment on potential partners.
Despite Coke’s decision to exercise the change-of-control clause for Coca-Cola Beverages Africa, AB InBev will continue to have some interest in Coke bottling operations. The brewer’s deal for SABMiller gives it a 20% interest in France’sCastel Group, which bottles Coke products in more than a dozen African countries, including Algeria and Tunisia.
The company also retains SABMiller’s soft-drink bottling businesses with Coke in El Salvador and Honduras, which account for less than 1% of Coke’s volume. A Coke spokesman said those agreements would be handled separately at a later date.
Coke typically insists on change-of-control clauses with its bottling partners, giving Coke the right to buy out a partner’s share if the partner is acquired by someone else.
SABMiller’s equity stake in the African bottling venture is estimated to be valued at about $4 billion, according to Sanford C. Bernstein analysts.
Coca-Cola Beverages Africa began operations in July, initially spanning 11 countries with plans to expand to 14 countries. It is based in South Africa, with more than 30 bottling plants spanning southern and eastern Africa.
When Coke announced its three-way partnership in late 2014 with SABMiller and Gutsche, it estimated the new bottling entity had $2.9 billion in annual revenue and $505 million in earnings before interest, tax and amortization. Source: Nasdaq