Coca-Cola Europacific Partners (CCEP) and Aboitiz Equity Ventures (AEV) have announced their intention to jointly acquire Coca-Cola Beverages Philippines (CCBPI), the bottling arm of Coca-Cola in the country, for $1.8 billion in cash.
A strategic move to expand in Asia
The deal, which is expected to close by the end of 2023, will give CCEP and AEV a 60:40 ownership stake in CCBPI, which operates 19 manufacturing plants and over 70 sales and distribution offices across the Philippines.
CCEP, which is the largest Coca-Cola bottler in Western Europe and also operates in Australia and New Zealand, said the acquisition will make it the world’s largest Coca-Cola bottler by revenue and volumes.
“This transaction is a unique opportunity to expand our presence in Asia, a region that offers significant growth potential for CCEP,” said Damian Gammell, CEO of CCEP.
He added that CCBPI is a “highly successful” business with a strong management team, a loyal customer base and a track record of innovation.
A partnership with a local conglomerate
AEV, which is one of the largest and most diversified conglomerates in the Philippines, said the deal will allow it to co-invest in an established and profitable business with attractive growth prospects.
“We are excited to partner with CCEP, the world’s leading Coca-Cola bottler, and leverage on their capabilities and best practices to further enhance CCBPI’s operations and performance,” said Erramon Aboitiz, President and CEO of AEV.
He also said that AEV shares CCEP’s commitment to sustainability and social responsibility, and looks forward to working together to create value for all stakeholders.
A positive outlook for the Philippine market
CCBPI, which has been operating in the Philippines since 1981, is one of the largest beverage companies in the country, serving more than 1.5 million customers and employing over 10,000 people.
The company produces and distributes a wide range of beverages under the Coca-Cola brand, including sparkling drinks, juices, water, sports drinks, energy drinks and tea.
According to CCEP, the Philippine market offers significant growth opportunities for CCBPI, driven by favorable demographics, rising disposable income and increasing consumption of non-alcoholic beverages.
CCEP also said that it expects to generate synergies from the acquisition through operational efficiencies, procurement savings and innovation.
A modest impact on CCEP’s leverage
CCEP said that it will fund the acquisition through a combination of existing cash resources and new debt facilities.
The company also said that it expects to return to the top-end of its net debt to adjusted core profit range of 2.5-3 times by the end of 2024, instead of 2023 as previously anticipated.
CCEP said that the acquisition is subject to customary closing conditions, including regulatory approvals and consultation with employee representatives.
The company also said that it has signed a non-binding term sheet with AEV and is in advanced discussions regarding a potential joint transaction.