UPDATE: Coca-Cola Femsa To Acquire Central Mexican Bottler
December 15 2011 - 12:40PM
Dow Jones News
Mexican soft-drink company Coca-Cola Femsa (KOF.MX, KOF) said
Thursday it has agreed to acquire and merge the bottling operations
of Grupo Fomento Queretano, in its third such deal this year as it
continues with consolidation of the Coca-Cola Co. (KO) bottling
system in Mexico.
Coca-Cola Femsa said the transaction is valued at 6.6 billion
pesos ($475 million). Shareholders of Grupo Fomento Queretano will
receive around 45.1 million newly issued Coca-Cola Femsa L shares,
valued at MXN119.29 a share. Coca-Cola Femsa will also assume
MXN1.22 billion in net debt.
Coca-Cola Femsa shares recently traded 1.1% higher to MXN121.31
on the Mexican Stock Exchange.
Privately held Grupo Fomento Queretano is one of Mexico's oldest
Coca-Cola bottlers, with operations mostly in Queretaro and other
central states, the company said.
The Queretaro-based bottler has two bottling facilities and nine
distribution centers, with close to 2,400 employees serving more
than 37,000 clients. In 2011, the bottler is expected to sell 110
million unit cases and generate MXN3.02 million in revenue for
estimated earnings before interest, taxes, depreciation and
amortization of MXN683 million.
The deal also gives Coca-Cola Femsa a 12.92% stake in sugar firm
Promotora Industrial Azucarera.
Coca-Cola Femsa, Latin America's largest Coca-Cola bottler, said
that this latest deal, along with two others earlier this year with
Grupo Tampico and Grupo Cimsa, add more than 425 million unit cases
and MXN12 billion in annual revenue for an approximate 30% increase
in volume and revenue for its Mexican operations.
"We continue to show flexibility to invite new partners with
whom we share an aligned vision of economic and social value
creation," Coca-Cola Femsa chief executive Carlos Salazar said in a
statement.
For their part, shareholders of Grupo Fomento Queretano
highlighted Coca-Cola Femsa's scale, management team and geographic
proximity--the larger bottler operates territories to the east and
west of the Queretaro-based firm--for their choice of
alignment.
Also this year, Embotelladoras Arca merged with Grupo
Continental to form Arca Continental (AC.MX), the second-largest
Coke bottler in Mexico and Latin America.
Apart from Coca-Cola Femsa and Arca Continental, there are now
eight remaining independent Coke bottlers operating in Mexico. The
Coca-Cola company supports the consolidation trend, as it sees a
more unified system improving its business in a country that
contributes heavily to the Atlanta-based firm's bottom line.
"For us, anything that improves efficiency is good," Rafael
Fernandez, vice president of public affairs and communication for
Coca-Cola de Mexico, told Dow Jones Newswires during an October
interview at the company's Mexico City headquarters.
-By Anthony Harrup and Amy Guthrie, Dow Jones Newswires; (5255)
5890 5176; anthony.harrup@dowjones.com