Coke’s anchor franchise bottler in Latin America (the US firm’s largest) agreed the massive $688.5m all-cash deal to take a 51% stake in the $1.1bn turnover business, and has made its first move into the Southeast Asian market.
The purchase price is based on an EBITDA multiple of approximately 13.5x, and gives FEMSA an option to acquire the remaining 49% of shares at any point over the next seven years, from when the transaction closes (subject to regulatory agreement) in early 2013.
José Antonio Fernández Carbajal, chairman of Coca-Cola FEMSA, said: “We see profitable growth prospects and long-term returns in emerging market economies.”
His words were echoed by Salazar Lomelin, Coca-Cola FEMSA CEO, who said the firm had strengthened its position in the global beverage industry with the acquisition of Coca-Cola Bottlers Philippines (CCBPI).
“This represents an important step in our growth strategy and our commitment to the Coca-Cola system…This transaction reinforces our commitment to identify avenues of growth and value creation for our shareholders.”
Looks like Latin America
FEMSA noted that The Philippines had one of the highest per capita consumption rates of Coca-Cola products in the region and presented significant opportunities for further growth.
Coca-Cola FEMSA said hoped to ride the wave of favorable socio-economic and demographic factors in the country, including a cultural resemblance to Latin America.
The firm quoted HSBC Global Research report The World in 2050 approvingly a propos its youthful dynamism and economic emergence.
“The star performer, however, is the Philippines, where a combination of strong fundamentals and powerful demographics gives rise to an average growth rate of 7% for the coming 40 years.”
Through the deal it acquires 23 production plants that serve close to 800,000 customers, while the business is expected to sell around 530m unit cases of beverages in 2012.
Muhtar Kent, Coca-Cola Company CEO, said the deal reflected Coke’s “long-standing belief in the global franchise system and our continued commitment to innovation and growth in the Philippines”.