Coca-Cola Europacific Partners (CCEP) was formed via Coca-Cola European Partners’ acquisition of Coca-Cola Amatil in 2021: covering key markets such as Indonesia, Australia and New Zealand. The proposed acquisition of Coca-Cola Beverages Philippines for $1.8bn would further build on this expansion.
The acquisition would position the company as the world’s largest Coca-Cola bottler by both revenue and volume.
Large opportunity
The Philippines is the second largest market in Southeast Asia: with a large and growing population (the country’s 115m people make it the 13th largest globally with around 1.5% per annum population growth).
It also boasts stable GDP growth of around 6% and a fast-growing middle class. The market for soft drinks is estimated at around $8bn, with 10% growth in value per annum expected.
Coca-Cola Philippines has 19 manufacturing plants and around 9,000 employees. The company reported revenues of $1.7bn in 2022.
CCEP has signed a non-binding Term Sheet and is in advanced discussions with AEV regarding a potential joint transaction, which may lead to the acquisition of Coca-Cola Philippines from The Coca-Cola Company, based on a 60:40 ownership structure between CCEP and AEV.
CCEP and AEV have also entered into a non-binding Letter of Intent with The Coca-Cola Company, setting out the terms on which CCEP and AEV propose to acquire The Coca-Cola Company’s 100% ownership in CCBPI, consistent with The Coca-Cola Company’s stated intent to divest bottling operations.
“CCEP’s proposed acquisition of CCBPI, with AEV, one of the leading conglomerates in the local market, offers a great opportunity to co-acquire an established, well-run business with attractive profitability and growth prospects,” said Uxbridge, UK headquartered Coca-Cola Europacific Partners as it announced the proposed acquisition this morning.
“The proposed transaction is a further step for CCEP to create a more diverse footprint within its existing API business segment and support Indonesia’s transformation journey. It is aligned with CCEP’s aim of driving sustainable and stronger growth through diversification and scale, and underpins the company’s strategic mid-term objectives.
“CCEP and AEV’s non-binding Letter of Intent with The Coca-Cola Company implies an enterprise value (EV) for CCBPI of US$1.8bn (on a debt free cash free basis). The consideration would be paid in cash, which would have a modest impact on CCEP’s leverage; CCEP’s guidance to return to the top end of its Net Debt to Adjusted EBITDA range of 2.5-3.0 times by the end of FY23 would instead be expected to be achieved during FY24. CCBPI delivered ~US$1.7 billion of revenue and ~US$90 million of PBT in FY22.
“As CCEP would be the majority owner (60%), it is expected to consolidate CCBPI as of the acquisition date and establish a non-controlling interest representing AEV’s minority interest (40%). The business would be governed by a Board of 5 members, three appointed by CCEP and two by AEV. CCEP would also appoint the CEO.
“The proposed acquisition is subject to a number of conditions, including satisfactory completion of due diligence (which is well underway), the parties concluding definitive agreements and the receipt of regulatory approvals.
“There is, therefore, no certainty, at this stage, that the acquisition of CCBPI will be entered into or completed and, as such, further updates will be provided in due course. The potential transaction, if entered into, would be expected to close around the end of FY23.”
