Coca-Cola bottler CCEP intends to jointly acquire Coke Philippine’s business for $1.8bn to become the world’s largest Coca-Cola bottler by revenue and volumes. The Uxbridge, UK-based Coca-Cola Europacific Partners (CCEP.L) said on Wednesday it had signed a non-binding term sheet and is in advanced discussions with Philippine conglomerate Aboitiz Equity Ventures (AEV) regarding a potential joint transaction to purchase Coca-Cola Beverages Philippines (CCBP) from The Coca-Cola Company (KO.N). The deal to buy CCBP in cash will be on a 60:40 ownership structure between CCEP and AEV, with a value per share of approximately $1.8 billion. “The proposed acquisition is in line with CCEP’s strategy to diversify its footprint by venturing into the branded consumer goods space,” the company said. It adds that the acquisition would also support its goal to expand in the Asia Pacific region. The deal to buy CCBP in cash comes after CCEP’s successful expansion into the region via acquiring Indonesia-based Coca-Cola Amatil last year.
CCEP’s total beverage business in the Philippines comprises 19 brands and employs over 10,000 Filipinos nationwide, including 19 manufacturing plants and over 60 sales offices and distribution centers. It has been refreshing people and making a difference in the country for over 108 years, being among Coca-Cola’s first markets in Asia to begin local bottling operations. It is committed to advancing sustainable growth and making a positive impact through its ongoing water replenishment programs in over 180 communities, empowering women entrepreneurs by providing training and peer mentoring and accelerating packaging collection and recycling under its global World Without Waste initiative.
The Philippines is one of the world’s biggest soft drink markets, with a population of more than 108 million population. The company’s beverage portfolio in the country includes iconic brands such as Coke, Royal, Sprite, Minute Maid, Viva, and Thunder. Its products are distributed in over 4,600 outlets, covering over 90 percent of the country’s population.
Since its initial public offering in 2007, CCEP’s shares have gained over 15 percent and trade at roughly 20 times earnings. The company has a debt-free balance sheet with over $9 billion in net cash as of December 2022.
Regarding financials, the deal is expected to have a modest effect on CCEP’s leverage. Before the announcement, CCEP had forecast that it would return to the top end of its net debt to an adjusted core profit range of 2.5-3 times by the end of 2023. It now expects to achieve this target in 2024 instead. The agreement is subject to due diligence and approvals. Rothschild & Co is acting as a financial adviser, and Slaughter and May and Villaraza & Angangco serve as legal counsel to CCEP. The transaction is expected to close by the end of this year.
