Coca-Cola Femsa, the Mexican Coca-Cola bottler, has acquired its counterpart Panamco in a deal which will create the biggest producer of Coca-Cola products outside the US.
Coca-Cola Femsa will pay $3.6 billion for Panamco, including the assumption of $880 million in debt. Of this, some $1.82 billion will go to the Atlanta-based Coca-Cola Company, along with a number of shares in Coca-Cola Femsa.
The combined company, which will continue to operate under the Coca-Cola Femsa name, will be the leading bottler of Coca-Cola products in Latin America, and the world's second-largest Coca-Cola bottler with estimated sales of $4.6 billion and estimated total volume of 1.9 billion unit cases.
In Mexico, which accounted for approximately 70 per cent of the combined company's EBITDA in 2001, Coca-Cola Femsa will have a leading position in the country's soft drink market, with contiguous territories and increased scale as a result of this acquisition.
It will also be the leading player in a number of other national and regional markets in Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil and Argentina.
Commenting on the transaction, Jose Antonio Fernandez, chairman of Coca-Cola Femsa, said: "This transaction represents a major step in the development of our strategy. For many years, we have focused on building Coca-Cola Femsa's capabilities to create a platform for the strategic expansion of our business.
"The combination of Panamco's bottling assets with Coca-Cola Femsa's proven operational expertise and record of generating returns that are among the highest in the industry offers important synergies and creates great potential for major productivity gains and growth opportunities that will benefit all of our shareholders, consumers, customers and outstanding employees.
Moreover, through the extension of our systems and best practices to Panamco's markets, we will enhance our ability to serve retailers and consumers more effectively, allowing us to quickly capitalise on our expanded market reach," he said.
Craig Jung, chief executive of Panamco, said: "We are very pleased with this transaction. The attractive premium offered on our share price reflects the significant value that Panamco and its outstanding team can bring to the combined company, and highlights our strong commitment to maximising value for our shareholders. We have full confidence that the combined company will be well positioned for continuing industry leadership, both within core Latin American markets, and globally."
Coca-Cola Femsa is part of Femsa, Latin America's largest beverage company in terms of sales. It produces beer under the Tecate, Carta Blanca, Superior, Sol, XX Lager, Dos Equis, and Bohemia brands, as well as the various Coca-Cola soft drinks brands.
Coca-Cola Femsa already accounts for approximately 3.4 per cent of Coca-Cola global sales, 25.0 per cent of all Coca-Cola sales in Mexico and approximately 36.5 per cent of all Coca-Cola sales in Argentina. The Coca-Cola Company owns a 30 per cent equity interest in Coca-Cola Femsa, in line with its practice of holding stakes in all its major bottlers.
Panamco is the largest soft drink bottler in Latin America and one of the three largest bottlers of Coca-Cola products in the world. It produces and distributes substantially all Coca-Cola soft drink products in its franchise territories in Mexico, Brazil, Colombia, Venezuela, Costa Rica, Nicaragua, Guatemala and Panama, along with bottled water, beer and other beverages in some of these territories.