Blog Coverage Coca Cola Acquiring AB InBev’s Stakes in Coca-Cola Beverages Africa and Bottling Operations in Other Geographies

LONDON, UK / ACCESSWIRE / December 22, 2016 / Active Wall St. blog coverage looks at the headline from Soft Drinks Major The Coca-Cola Co. (NYSE: KO) and Belgian Brewer Anheuser-Busch InBev (NYSE: BUD) (“AB InBev”) as both companies announced they have entered in a two-part agreement on December 21, 2016. Firstly, Coca-Cola announced that it is acquiring AB InBev’s stake in Coca-Cola Beverages Africa. Secondly, in an in-principle agreement between the two, Coca-Cola will acquire AB InBev’s stake in the bottling operation in other geographies. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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The details of the two-layered agreement

First Layer – Coca-Cola will pay $3.15 billion to AB InBev’s 54.5% equity stake in Coca-Cola Beverages Africa which includes the countries of South Africa, Namibia, Kenya, Uganda, Tanzania, Ethiopia, Mozambique, Ghana, Mayotte and Comoros.

Second-Layer – Coca-Cola enters into an in-principle agreement with AB InBev to acquire the latter’s stake in its bottling operation in these regions: Zambia, Zimbabwe, Botswana, Swaziland, Lesotho, El Salvador and Honduras. The deal has been finalized for an undisclosed amount.

Coca-Cola plans to hold on to these geographies till the time it finds new franchisee partners. For the purpose of reporting, these stakes will be shown as discontinued operations.

The deal is expected to be finalized by end of 2017 subject to regulatory approvals.

Commenting on the deal, Muhtar Kent, Chairman and CEO of The Coca-Cola Co. Said:

“We will move forward with our long-term strategic plan in these important growth markets. We are continuing negotiations with a number of parties who are highly qualified and interested in these bottling territories and look forward to refranchising these territories as soon as practical following regulatory approval.”

Carlos Brito, CEO of AB InBev added:

“We are happy that we have been able to reach this agreement with The Coca-Cola Company in a timely manner and with a satisfactory outcome for all parties.”

Significance and Background

Leuven, Belgium-based AB InBev is a global brewer and is known for its beer brands like Budweiser®, Corona® and Stella Artois®, Beck’s®, Castle®, Castle Lite®, Hoegaarden® and Leffe® etc. The Company’s revenues for 2015 were $55.5 billion and it has approximately 200,000 employees based in more than 50 countries worldwide.

In October 2016, AB InBev completed the merger of SABMiller for approximately $100 billion, making it one of the biggest deals in the beverages and consumer products segment. As a result of this merger, AB InBev inherited SABMiller’s bottling stake with Coca-Cola Beverages Africa. Coca-Cola had formed Coca-Cola Beverages Africa with SABMiller and the South African owners of bottler Coca-Cola Sabco in 2014. Coca-Cola had retained the rights to acquire SABMiller’s 57% stake in the event that there is any change in ownership or management.

The conflict of interest between AB InBev and Coca-Cola also took center stage post the AB InBev – SABMiller merger as AB InBev is the largest bottler for PepsiCo in South America. Once AB InBev/ SABMiller merger was completed, Coca-Cola exercised its right to acquire SABMiller’s stake in Coca-Cola Beverages Africa from AB InBev.

AB InBev on its part has been slowly, divesting non-core businesses of SABMiller including its European, US, and Chinese businesses, since the merger. In December 2016, AB InBev sold off SABMiller’s businesses in Poland, the Czech Republic, Slovakia, Hungary, and Romania to Asahi Group Holdings for €7.3 billion.

Stock Performance

At the closing bell, on Wednesday, December 21, 2016, Coca-Cola’s stock marginally declined 0.22%, ending the trading session at $41.57. A total volume of 9.69 million shares were traded at the end of the day. In the last month, shares of the company have advanced 1.36%. The company’s shares are trading at a PE ratio of 25.22 and have a dividend yield of 3.37%.

Yesterday, AB InBev’s stock price slightly rose 0.61% to end the day at $103.61. A total volume of 1.54 million shares were exchanged during the session. The company’s share price has gained 0.27% in the past month. The stock currently has a market cap of $174.59 billion and has a dividend yield of 3.29%.

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