Coca-Cola bottler CCEP proposes $1.8bn purchase of Coca-Cola Beverages Philippines

Coca-Cola Europacific Partners plc (CCEP) and Aboitiz Equity Ventures Inc. (AEV) have announced their intention to jointly acquire Coca-Cola Beverages Philippines, Inc. (CCBPI) from The Coca-Cola Company (KO). The proposed acquisition, valued at US$1.8 billion (on a debt-free cash-free basis), aims to solidify Coca-Cola Europacific Partners’ position as the world’s largest Coca-Cola bottler by revenue and volume.

The deal follows Coca-Cola Europacific Partners’ successful expansion into Australia, Pacific & Indonesia (API) in 2021, supporting its long-term growth strategy and focus on driving shareholder value. Coca-Cola Europacific Partners has signed a non-binding Term Sheet and is engaged in advanced discussions with Aboitiz Equity Ventures for a 60:40 ownership structure in the potential joint transaction.

The agreement, expressed in a non-binding Letter of Intent with Coca-Cola Company, outlines the terms for Coca-Cola Europacific Partners and Aboitiz Equity Ventures to acquire Coca-Cola Company’s 100% ownership in Coca-Cola Beverages Philippines. This aligns with Coca-Cola Company’s stated intention to divest its bottling operations. Collaborating with Aboitiz Equity Ventures, one of the leading local conglomerates, presents Coca-Cola Europacific Partners with an opportunity to co-acquire an established business with attractive profitability and growth prospects.

Coca-Cola Europacific Partners joins with Aboitiz Equity Ventures for $1.8bn joint acquisition of Coca-Cola Beverages Philippines. Photo courtesy of StockSnap from Pixabay.

Coca-Cola Europacific Partners’ proposed acquisition of Coca-Cola Beverages Philippines would extend its diverse footprint within the existing API business segment and support Indonesia’s transformation journey. The transaction underpins the company’s strategic mid-term objectives and goals of driving sustainable growth through diversification and scale. The consideration, paid in cash, would have a modest impact on Coca-Cola Europacific Partners’ leverage, with a return to its Net Debt to Adjusted EBITDA range of 2.5-3.0 times by the end of FY24 instead of FY23.

Coca-Cola Beverages Philippines’ financials reflect its lucrative appeal, with around US$1.71 billion of revenue and around US$901 million of PBT in FY22. Coca-Cola Europacific Partners, as the majority owner (60%), would consolidate Coca-Cola Beverages Philippines from the acquisition date, establishing a non-controlling interest for Aboitiz Equity Ventures’ minority share (40%). The business would be governed by a five-member Board, three from Coca-Cola Europacific Partners and two from Aboitiz Equity Ventures, with the CEO appointed by Coca-Cola Europacific Partners.

The proposed acquisition remains subject to several conditions, including satisfactory completion of due diligence, definitive agreements, and regulatory approvals. As such, there is no certainty that the acquisition will be finalized or completed at this stage. If entered into, the deal is expected to close around the end of FY23. The joint acquisition between Coca-Cola Europacific Partners and Aboitiz Equity Ventures adds a new chapter to the global expansion in the beverage industry, with further updates to be provided in due course.