SABMiller, Coke form drinks giant - to be headquartered in PE

BY TAI CHISHAKWE - NOVEMBER 28, 2014

SABMiller and Coca-Cola on Thursday announced plans to form one of the world’s largest bottling operations with annual revenue of almost US$3 billion or R33 billion in 12 markets across southern and east Africa under the name of Coca-Cola Beverages Africa.

The new company will have operations in 12 high-growth markets, which include Kenya, Ethiopia, Mozambique, Tanzania and Uganda, among others.

Its headquarters are planned to be in Port Elizabeth and Phil Gutsche, Chairman of Gutsche Family Investments (GFI), will be Chairman.

In a joint statement, the three firms, including Coca-Cola Sabco, said Africa offered a significant growth potential in beverages, underpinned by rising personal disposal income, a fast-growing population and raising per capita consumption.

SABMiller will hold 57 percent of Coca-Cola Beverages Africa, with Coca-Cola holding 11.3 percent and the Gutsche Family, which owns 80 percent of Coca-Cola Sabco, will hold a 31.7 percent stake in the operation.

Gutsche said, “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. 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.” 

“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 resource to capture and accelerate top-line growth,” the companies said.

Thanks to the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola’s beverages at a rate of 1.9 billion servings a day.

Once the transaction is completed, it will be implemented in two phases.

The first phase will include bringing together SABMiller’s local bottling business known as Amalgamated Beverage Industries (ABI) and Appletiser and its soft-drink business in eight other African countries. The bottle-giant will initially produce and distribute beverages in nine countries including South Africa, Kenya, Namibia, Comoros and Mayotte among others.

The firms also announced that Coca-Cola Company would acquire SABMiller’s Appletiser brands on a worldwide basis, and acquire rights to a further 19 non-alcoholic ready-to-drink brands in Africa and Latin America for US$260 million.

Following the announcement, analysts said Anheuser-Busch InBev, which had shown some interest in acquiring SABMiller, now has a big burden on its hands.

SABMiller’s share price also fell 0.31 percent to R61.78.