Beverage company to pay $3.15 billion to AB InBev for control, then seek new partner

By WSJ Staff

Coca-Cola Co. has agreed to buy a 54.5% stake in Coca-Cola Beverages Africa, the soft-drink company's largest African bottling business, from Anheuser-Busch InBev SA for $3.15 billion.

Coke said in October that it planned to exercise a change-of-control clause for the business, which it plans to refranchise to another partner, after AB InBev got control of the stake when it boughtSABMiller PLC.

The Atlanta-based company wants to keep AB InBev at arm's length following speculation that it could become a future takeover target for the beer giant. AB InBev is also a major bottler of nonalcoholic drinks in Latin America for PepsiCo Inc., Coke's longtime rival.

For AB InBev, the deal represents its latest asset sale since its $100 billion-plus takeover of rival SABMiller, for which it won regulatory approval a few months ago.

Coca-Cola Beverages Africa is based in South Africa and has operations, including more than 30 bottling plants, in 10 countries across southern and eastern Africa. Coke and South Africa-based Gutsche Family Investments, another longtime bottling partner, own the rest of the business.

Coke and InBev also announced Wednesday that they had reached an agreement for the soft-drinks company to separately buy the brewer's interest in bottling operations Zambia, Zimbabwe, Botswana, Swaziland, Lesotho, El Salvador and Honduras for an undisclosed amount. Coke also plans to refranchise those operations and expects both deals with AB InBev to close by the end of 2017.

Coke CEO Muhtar Kent said the company was in talks with a number of parties who are interested in the bottling businesses and would seek to refranchise the operations as soon as it had won regulatory approval.

The U.S. drinks maker has been divesting manufacturing and distribution assets world-wide, as part of an "asset light" strategy to focus on its more profitable concentrate business as soda consumption is slowing.

Industry analysts have flagged European-based Coca-Cola European Partners PLC and Coca-Cola Hellenic Bottling Co. or Mexico's Coca-Cola Femsa SAB as being among potential partners in Africa. Coke has hundreds of bottling partnerships around the world.

AB InBev will continue to have some interest in Coca-Cola bottling operations. The brewer's takeover of SABMiller also gives it a 20% stake in France's Castel Group, which bottles Coke products in more than a dozen African countries, including Algeria and Tunisia.

Coca-Cola typically insists on change-of-control clauses with its bottling partners, giving it the right to buy out a partner's share if it is acquired by someone else.

Rothschild is advising Coca-Cola on the deal while Lazard is advising AB InBev.

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Mike Esterl

, Tripp Mickle and Ben Dummett contributed to this article.

(END) Dow Jones Newswires

December 22, 2016 02:47 ET (07:47 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.