Coca-Cola HBC is to purchase a majority stake in Coca-Cola Drinks Africa, a deal set to create the world’s second-largest Coke bottler.
The UK-listed group has struck a deal to purchase a mixed 75% of Coca-Cola Drinks Africa (CCBA) from The Coca-Cola Firm and Gutsche Household Investments for $2.6bn.
Coca-Cola HBC mentioned the acquisition would “materially increase” its presence in Africa.
The corporate has operations in Egypt and Nigeria. The deal will see Coca-Cola HBC enter 14 extra markets in Africa, together with Ethiopia, Kenya and South Africa.
Coca-Cola HBC plans to pursue a secondary itemizing on the Johannesburg Inventory Alternate.
“We now have a deep understanding of the compelling proposition Africa presents. It has a large and rising client base and there are vital alternatives to extend per capita consumption,” Coca-Cola HBC chief govt Zoran Bogdanovic mentioned.
Mixed, the businesses would have generated pro-forma revenues of €14.1bn ($16.39bn) and EBIT of €1.4bn in 2024. The companies collectively would account for two-thirds of the volumes put by the Coca-Cola system in Africa.
Coca-Cola HBC mentioned the companies are “concentrating on” the transaction being finalised “by the top of 2026, topic to approvals”.
The transaction is “anticipated to be low-single digit EPS accretive” from the primary full yr after the deal is accomplished, the corporate added.
The remaining 25% of CCBA is topic to an possibility settlement between Coca-Cola HBC and The Coca-Cola Firm.
Underneath the phrases of the deal, Coca-Cola HBC can buy, or The Coca-Cola Firm can promote, the stake inside six years of the transaction being finalised.
“Like Coca-Cola HBC, we see large alternative for development and worth creation in Africa,” The Coca-Cola Firm COO Henrique Braun mentioned.
Bernstein analyst Nadine Sarwat mentioned there’s a “significant complete addressable market” for non-alcoholic RTDs in CCBA’s group of African markets. She pointed to the circa 493 million folks residing within the 14 international locations and added: “In 2023, CCBA markets consumed 11bn litres of carbonates versus 27bn litres for CCH’s present markets. This reveals the comparatively low per-capita consumption of carbonates in these international locations at present.”
Alongside the deal, Coca-Cola HBC issued a buying and selling replace for the third quarter of the yr. Revenues rose 5% on an natural foundation, with volumes 1.1% greater.
Bogdanovic mentioned: “Our continued progress is mirrored in one other stable quarter, resulting in natural income development of 8.1% over the primary 9 months of the yr. This efficiency highlights the energy of our portfolio and our means to drive development in quantity, revenue-per-case and market share, even in combined markets.”
