SMC reacquires Coca-Cola Phils

The country’s largest food and beverage conglomerate, San Miguel Corp., just got bigger following its reacquisition of a controlling stake in Coca-Cola Bottlers Philippines Inc. (CCBPI), which commands an estimated 70-percent share of the local softdrink market.

In a statement, SMC said it had reached an agreement in principle with Australia’s Coca-Cola Amatil Ltd. (CCA) and the Atlanta-based parent company The Coca-Cola Co. (TCCC) for a combination of share swap, cash infusion and debt offsetting transactions valued at A$2.25 billion or $1.24 billion.

The deal would give SMC a 65-percent stake in CCBPI while TCCC’s interest would be reduced to 35 percent. In 1997, SMC under then chairman and CEO Andres Soriano III, sold out its 70-percent holdings in the local Coke unit to CCA under a share-swap agreement which, in turn, enabled SMC to own 25 percent of the Australian bottler – the largest Coca-Cola unit outside the US.

The reacquisition deal involves the cancellation of approximately 149 million CCA shares held by TCCC and 219.4 million shares held by SMC at a cancellation price of A$4.75 and additional consideration of approximately A$495 million comprising cash and debt. SMC will have full management control of CCBPI and a 65-percent shareholding of the common equity of CCBPI, with the balance being held by TCCC.

"With the acquisition of CCBPI, SMC becomes the undisputed leader in the Philippine beverage market. The company further expects to achieve significant synergies and cost savings in the areas of distribution and logistics," SMC chairman and CEO Eduardo Cojuango Jr. said.

He added the transaction "represents the acquisition of an excellent franchise whose products enjoy unrivaled brand loyalty," and is in line with the company’s strategy of actively managing investments and acquiring companies that provide strategic fit with its existing core businesses.

The local Coca-Cola unit generated sales revenues of P29 billion last year, representing about 70 percent of the local softdrinks market.

Since Cojuangco took over the helm of SMC, the company has gone through a major consolidation phase characterized by the disposition of some non-core assets and the acquisition of prime brands to complement its flagship product lineup.

Among SMC’s recent acquisition are Australian premium beer maker J. Boag and Son and, together with its wholly-owned subsidiary La Tondeña Distillers Inc., dominant juice producer Sugarland and bottled water leader Wilkins. With this new product portfolio, SMC is now the undisputed leader in the beer, gin, bottled water, juice and softdrink market in the Philippines.