Beverage giants Coca-Cola and SABMiller have joined forces with packaging firm Coca-Cola Sabco, to form "Coca-Cola Beverages Africa" -- the largest Coca-Cola bottler in Africa and the 10th largest in the world.
SABMiller will reportedly hold 57% of the new venture while Coca-Cola will hold 11.3% stake. The rest 31.7% will be held by Gutsche Family Investments, the largest shareholder in Coca-Cola Sabco.
Once formed, Coca-Cola Beverages Africa "will be strongly positioned to offer consumers greater choice, broader availability and better value," the companies said in a statement. It will operate in more than 12 countries and employ more than 14,000 people across 30 bottling plants with gross assets of about $2.3 billion.
What's in the Deal
The deal will help SABMiller, the world's second largest brewing company, gain access to the soft-drinks and non-alcoholic drinks segment. It will also retain Coca-Cola franchises in El Salvador and Honduras.
On the other hand, Coca-Cola will acquire SABMiller's Appletiser brand for $260 million and get licensing rights to 19 other non-alcoholic drinks.
Coca-Cola Beverages Africa will initially produce and distribute Coca-Cola beverages in South Africa, Kenya, Ethiopia, Mozambique, Tanzania, Uganda, Namibia, Comoros and Mayotte, according to the statement.
"As one of the top 10 largest Coca-Cola bottling partners worldwide, Coca-Cola Beverages Africa can leverage the scale, resources, capability and efficiency needed to accelerate Coca-Cola growth and contribute to the economic and social prosperity of African communities," Muhtar Kent, chairman and CEO of The Coca-Cola Company said in the statement.
"Soft drinks are an important element of our growth strategy. This transaction increases our exposure to the total beverage market in Africa. The opportunity is significant, with favourable demographics and economic development pointing to excellent growth prospects. This also signifies a strengthening of our strategic relationship with The Coca-Cola Company," Alan Clark, CEO of SABMiller added.
Phil Gutsche, chairman of Gutsche Family Investments (GFI) also said that the merger was "an important and logical step to enable Coca-Cola Beverages Africa to optimise the opportunities for development in the rapidly-evolving Africa beverage market."
"We are very excited about the opportunity and are totally committed to ensuring that Coca-Cola Sabco's distinctive culture is successfully integrated with that of our new partners in order to create an even more successful business in the future," he said.
Improving personal disposable income, a rapidly increasing population and rising per capita consumption makes Africa a great market for the beverage industry.