Coca-Cola has reached a deal to buy Anheuser-Busch InBev’s majority stake in Coca-Cola’s African bottling venture, the companies said Wednesday.
The world’s largest soft-drink maker will pay $3.15 billion for a 54.5% equity stake in Coca-Cola Beverages Africa (CCBA), a joint bottling operation established with former London-based multinational brewing company SAB Miller in 2014.
CCBA operates 30 bottling plants with more than 14,000 employees and accounts for approximately 40% of Coca-Cola’s beverage supply on the continent. Coca-Cola said it plans to hold the assets temporarily until they can be refranchised to other partners. In the meantime, for reporting purposes the company plans to account for the acquired stake as a discontinued operation.
“We will move forward with our long-term strategic plan in these important growth markets,” said Coca-Cola CEO and chairman Muhtar Kent. “We are continuing negotiations with a number of parties who are highly qualified and interested in these bottling territories and look forward to refranchising these territories as soon as practical following regulatory approval.”
Coca-Cola exercised a “change-of-control” clause in the original CCBA contract that gave Coca-Cola the right to buyback the majority stake from SAB Miller if ownership of the company changed hands, the Wall Street Journal reported.
The companies also announced an agreement in principle for Coca-Cola to acquire AB InBev’s interest in bottling operations in Zambia, Zimbabwe, Botswana, Swaziland, Lesotho, El Salvador and Honduras for an undisclosed amount.
The move comes on the heels of Anheuser-Busch InBev’s $108 billion merger with SAB Miller, which created the world’s largest beer group boasting about 30% of the global market. Anheuser-Busch has been shedding assets to comply with regulatory requirements tied to the mega-deal, like popular European beer brands Peroni and Grolsch.
CCBA is the 10th-largest Coca-Cola distributor in the world, currently serving 11 African countries with plans to expand to three more countries over the next 18 months.
The transactions are expected to close by year-end 2017.