Coca-Cola HBC AG will buy a majority stake in Coca-Cola Beverages Africa for $2.6 billion (R45 billion) to create the second-largest bottling partner for the fizzy drink by volume globally.
Coca-Cola HBC, founded in 1951 in Nigeria as the Nigerian Bottling Company, now headquartered in Switzerland, operates in 29 countries on 3 continents.
The group will buy 75% of Johannesburg-based CCBA, adding 14 African markets to its portfolio.
The group will represent two-thirds of total Coca-Cola system volume on the continent, covering more than half its population, it said in a statement Tuesday.
It’s purchasing the CCBA stake from Coca-Cola Co. and Gutsche Family Investments, with an option to buy the rest within six years.
The US drinks firm is moving away from the business of bottling after also selling a stake in its Indian operations this year.
The companies expect to complete the transaction at the end of next year.
CCBA was formed in 2015 as a merger of The Coca-Cola Company, SAB Miller and Gutsche Family Investments (GFI) bottling operations in Southern and Eastern Africa.
It comprised SABMiller’s Coca-Cola bottling franchise, GFI’s Coca-Cola Fortune in South Africa, and Coca-Cola’s South African soft drinks bottling businesses.
The merger was approved by South African regulators in October 2015, and CCBA began operating as a legal entity in July 2016.
In October 2016, Anheuser-Busch InBev (AB InBev) announced it would be merging with SABMiller. In the same month, Coca-Cola Global announced its intention to acquire AB InBev’s stake in CCBA.
Coca-Cola and AB InBev reached an agreement in December 2016 regarding the transition of AB InBev’s equity stake in CCBA, which was concluded in October 2017.
CCBA is currently 66.5% owned by Coca-Cola, with the remaining 33.5% held by GFI.
In April 2021, Coca-Cola and CCBA announced plans to list CCBA as a publicly traded company.
The global group said at the time that it intended to sell a portion of its shareholding in CCBA via an initial public offering.
As part of the new deal, Coca-Cola HBC plans a secondary listing on the Johannesburg Stock Exchange “to underpin its commitment to both South Africa and the African continent,” it said.
Possible job cuts
The sale of CCBA follows reports in September that Coca-Cola Beverages South Africa (CCBSA) was planning to cut as many as 680 jobs and shut some plants in South Africa.
CCBSA is the South African-based subsidiary of CCBA.
The group confirmed at the time that it was consulting on the possible cuts, but stressed that no final decision had been made.
Speaking to the SABC last month, the Food and Allied Workers Union (FAWU) confirmed receiving notice from the group of its intentions to retrench workers.
According to the group, the company had cited financial constraints as a primary reason for the decision, with intentions to close plants in Bloemfontein and East London as part of a restructuring.
FAWU said it received notice of a section 189 retrenchment process that would impact up to 680 workers, mostly cleaning staff. This is almost 9% of its 7,700 person workforce in South Africa.
The union said that cleaning staff are integral to the food and beverage production industry.
The SABC, which had seen the notice, reported that the company was offering separation packages to employees as an alternative to “forced separation”.
CCBSA said that, should restructuring plans be implemented, “adjustments” to it operations could result in job losses.
“In response to evolving industry dynamics, Coca-Cola Beverages South Africa intends to make adjustments to its organisation that, if implemented, may result in some roles being impacted and may, unfortunately, result in job losses,” it said at the time.
With Bloomberg
