The parties have agreed to combine the bottling operations of their non-alcoholic ready-to-drink beverage businesses in Southern and East Africa, which will see the new bottler – Coca-Cola Beverages Africa – serve 12 high-growth countries.
These high-growth countries reportedly account for around 40 per cent of all Coca-Cola beverage volumes in Africa.
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“Africa offers significant growth potential in beverages, underpinned by rising personal disposable income, a fast-growing population and increasing per capita consumption,” the companies said.
“With more than 30 bottling plants and over 14,000 employees, Coca-Cola Beverages Africa will be the largest Coca-Cola bottler on the continent, with the scale, complementary capabilities and resources to capture and accelerate top-line growth.”
They added that this will also allow the new African bottler to develop best operating practices and invest in order to benefit from growing demand and to drive profitability.
“With a shared vision, extensive experience of operating in African markets, and long-term commitment to the continent, Coca-Cola Beverages Africa will be strongly positioned to offer consumers greater choice, broader availability and better value,” they said.
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“The new bottler will continue the shareholders’ strong commitment to the economic and social development of the communities it serves, which includes providing access to clean water, supporting women’s economic empowerment and promoting wellbeing.”
On full completion of the proposed merger, SABMiller will hold 57.0 per cent of the bottler, Gutsche Family Investments (GFI), majority shareholders in Coca-Cola Sabco, will hold 31.7 per cent and the Coca-Cola Company will hold 11.3 per cent.
SABMiller chief executive Alan Clark said, “Soft drinks are an important element of our growth strategy. This transaction increases our exposure to the total beverage market in Africa.”
“The opportunity is significant, with favourable demographics and economic development pointing to excellent growth prospects. This also signifies a strengthening of our strategic relationship with the Coca-Cola Company,” he added.
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Muhtar Kent, chairman and CEO of the Coca-Cola Company, stated that a combined Coca-Cola bottling operation is further evidence of the company’s commitment to Africa, and its firm belief in the tremendous growth prospects that the continent offers.
“As one of the top 10 largest Coca-Cola bottling partners worldwide, Coca-Cola Beverages Africa can leverage the scale, resources, capability and efficiency needed to accelerate Coca-Cola growth and contribute to the economic and social prosperity of African communities,” he indicated.
Coca-Cola Beverages Africa is expected to initially distribute beverages in nine countries including South Africa, Kenya, Mozambique, Uganda and Namibia, with [DATA SAB:SABMiller] reportedly intending to include, at a later date, its Swaziland soft drinks business and those of its listed subsidiaries in Botswana and Zambia.
As part of the transaction, the Coca-Cola Company will acquire SABMiller’s Appletiser brands on a worldwide basis, and acquire or be licensed rights to a further 19 non-alcoholic ready-to-drink brands in Africa and in Latin America, for a cash consideration of 260 million US dollars.
SABMiller will also retain ownership of its non-alcoholic malt beverages in Africa and Latin America and will retain its Coca-Cola franchises in El Salvador and Honduras.
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According to the companies, Phil Gutsche, currently chairman of GFI, will also be chairman of Coca-Cola Beverages Africa.
“Our family sees this merger as an important and logical step to enable Coca-Cola Beverages Africa to optimise the opportunities for development in the rapidly-evolving Africa beverage market,” said Gutsche.
“We are very excited about the opportunity and are totally committed to ensuring that Coca-Cola Sabco’s distinctive culture is successfully integrated with that of our new partners in order to create an even more successful business in the future.”
The companies further indicated that Port Elizabeth in South Africa is the intended location for the company’s headquarters.