SMC firms up Coca-Cola deal

San Miguel Corp. and the Atlanta-based The Coca-Cola Co. (TCCC) have sealed a A$2.2 billion (US$1.24 billion) deal that would revert back majority ownership of Coca-Cola Bottlers Philippines Inc. (CCBPI) to the food and beverage conglomerate.

A company statement said both parties have signed a definitive agreement to jointly acquire CCBPI from Australia’s Coca-Cola Amatil (CCA).

Under the terms, SMC will gain control of 65 percent of CCBPI in exchange for the cancellation of its 219.4 million shares in CCA at A$4.75 per share and an additional consideration of about A$495 million in cash and debt.

Although TCCC still has a 35-percent stake in CCBPI, SMC will have full management control of the local Coke unit, a clear indication of support by TCCC in SMC’s managerial expertise.

The agreement, however, remains subject to approval by the CCA minority shareholders when they hold their annual stockholders meeting in Sydney on April 27.

The transaction brings back to San Miguel control of the softdrink firm after it relinquished majority ownership in 1997 during the time of then chairman and CEO Andres Soriano III.

CCBPI commands an estimated 70 percent of the local softdrink market on revenues of P28 billion last year.

"The acquisition represents a clear demonstration of our declared strategy of gaining operating control of our businesses. It will allow us to build on SMC’s already strong revenue base and will become an additional growth in the future," SMC chairman and CEO Eduardo Cojuangco said.

The Coca-Cola deal has deepened SMC’s product arsenal of undisputed market leaders, adding to its dominance in beer, juice and bottled water.

"Given our knowledge of the market and the Filipino consumer as well as our long stewardship of the franchise, we are confident that we will be able to build on CCBPI’s strengths and further improve its performance," Cojuangco added.