By Revin Mikhael D. Ochave, Reporter
CEBU-BASED conglomerate Aboitiz Equity Ventures, Inc. (AEV) entered into a definitive agreement with Coca-Cola Europacific Partners Plc. (CCEP) to jointly acquire Coca-Cola Beverages Philippines, Inc. (CCBPI) from The Coca-Cola Co. (TCCC) for $1.8 billion.
In a regulatory filing on Monday, AEV said the acquisition of CCBPI is valued at $1.8 billion on a debt-free, cash-free basis. CCBPI is the exclusive bottler and distributor of TCCC products in the Philippines.
Once closed, CCEP will own 60% of CCBPI while AEV will get the remaining 40%. The transaction is expected to close in the first quarter of next year.
“The proposed acquisition would build on AEV’s portfolio diversification strategy to enter the branded consumer goods space. AEV is well positioned to support CCBPI’s growth ambition due to the synergies which could be generated from AEV’s other business interests in the country,” AEV said.
“The proposed acquisition would also build on CCEP’s successful expansion into Australia, Pacific, and Indonesia in 2021. Further updates will be provided in due course,” it added.
AEV said the transaction is undergoing various customary closing conditions, including the approval from the Philippine Competition Commission (PCC).
The company also said the final cash consideration would be subject to cash, debt-like items, and working capital adjustments at the completion of the transaction, while the shareholders’ agreement between CCEP and AEV with comprehensive governance terms would take effect after the deal is closed.
In August, AEV announced its plan to jointly acquire CCBPI, in partnership with CCEP, which offers a “great opportunity to co-acquire an established, well-run business with attractive profitability and growth prospects.”
Sought for comment, BDO Capital and Investment Corp. President Eduardo V. Francisco said the move would help diversify AEV’s revenue streams.
“It should help Aboitiz diversify its revenue streams as [its] power [unit] currently is so large. Aboitiz can also use its nationwide reach to obtain synergies with Coca-Cola,” Mr. Francisco said in a Viber message.
“AEV is only 40% so they won’t drive the business. It is their partner, CCEP, who will control and run it,” he added.
The conglomerate recently said its power segment, Aboitiz Power Corp., accounted for 70% of its overall P18-billion net income as of September this year.
Aside from the planned acquisition of CCBPI, AEV has an existing presence in the food business through subsidiaries Pilmico Foods Corp., Pilmico Animal Nutrition Corp., and Pilmico International Pte. Ltd.
China Bank Capital Corp. Managing Director Juan Paolo E. Colet said the acquisition would become a “huge learning experience” for the Aboitiz group.
He said the acquisition wdoes not raise any competitive issues, adding that the deal allows AEV to be less reliant on its energy business.
Mr. Colet said the investment in CCBPI “is a totally new business” for the group.
“That said, AEV is coming in with a significant advantage because they will benefit from the expertise of CCEP, which is the world’s largest independent Coca-Cola bottler,” he said.
April Lynn Lee-Tan, COL Financial Group, Inc. chief equity strategist, said in a Viber message that AEV is projected to be on the lookout for more acquisitions in the future.
“I think AEV will just keep their eyes open for acquisition which may or may not belong to food, so long as it belongs to the target sectors and as long as they find it attractive,” Ms. Lee-Tan said.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that AEV’s move would bode well for AEV since TCCC is a global brand that caters to the mass market.
“This allows AEV to have additional sources of income since it is a strong global and local brand. It is also a good diversification for the company,” Mr. Ricafort said in a Viber message.
Shares of AEV at the local bourse rose five centavos or 0.11% to P47.25 apiece on Monday.