2 August 2023
Coca-Cola Europacific Partners plc (CCEP) today announces it has, together with Aboitiz Equity Ventures Inc. (AEV), entered into a Letter of Intent to jointly acquire Coca-Cola Beverages Philippines, Inc. (CCBPI), a successful business with attractive profitability and growth prospects, from The Coca-Cola Company (KO)
· The proposed acquisition would build on CCEP’s successful expansion into Australia, Pacific & Indonesia (API) in 2021, positioning it as the world’s largest Coca-Cola bottler by both revenue and volume, supporting its long-term growth strategy and focus on driving shareholder value;
· 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 CCBPI from KO, based on a 60:40 ownership structure between CCEP and AEV; and
· CCEP and AEV have entered into a non-binding Letter of Intent with KO, setting out the terms on which CCEP and AEV propose to acquire KO’s 100% ownership in CCBPI, consistent with KO’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.
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 KO implies an enterprise value (EV) for CCBPI of US$1.8 billion (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$1.71 billion of revenue and ~US$901 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.
About CCBPI and the market
Key highlights:
· Solid underlying market macroeconomics
o 115m population2 (13th globally) and ~1.5%2 p.a. population growth, second largest market in Southeast Asia after Indonesia
o Stable GDP growth ~6%2 and a fast growing middle class
· Large and growing NARTD category
o ~US$8bn3 and expected to grow ~10%4 in value p.a.
o Established Sparkling category ~55%3 (volume and value)
· Solid platform
o Delivered FY22 volume and revenue of ~650mUC6 and ~US$1.7bn1
o Leading value shares across NARTD of ~43%5 and ~69%5 in Sparkling
o Wide supply chain footprint with 196 manufacturing plants
o Strong customer focus, servicing ~1m6 outlets
o ~9k6 highly engaged colleagues
o ESG focus
§ ~50%6 of sparkling in returnable glass bottles (RGB)
§ Growing rPET content and packaging collection rates
§ ~40%6 women in leadership
1. CCBPI management information prepared on the basis of US GAAP, average 2022 USD/PHP FX rate of 54.4
2. External source: Philippine Statistics Authority
3. External source: Euromonitor, 2022
4. External source: Euromonitor, 2022-2027 CAGR
5. External source: Nielsen, 2022
6. CCBPI management information
About CCEP (LEI 549300LTH67W4GWMRF57)
CCEP is one of the leading consumer goods companies in the world. We make, move and sell some the world’s most loved brands – serving 600 million consumers and helping 1.75 million customers across 29 countries grow their business.
We combine the strength and scale of a large, multi-national business with an expert, local knowledge of the customers we serve and communities we support.
The Company is currently listed on Euronext Amsterdam, the NASDAQ Global Select Market, London Stock Exchange and on the Spanish Stock Exchanges, trading under the symbol CCEP.
For more information about CCEP, please visit www.cocacolaep.com & follow CCEP on Twitter at @CocaColaEP.
About AEV
AEV is one of the leading conglomerates in the Philippines with over 100 years of business history. It has major investments in power, banking and financial services, food, infrastructure, land, and data science and artificial intelligence. AEV is recognized as one of the best-managed companies in the Philippines and the region, consistently cited for its commitment to good corporate governance and sustainability. Currently, the company is on its Great Transformation journey to become the Philippines’ first Techglomerate as it continues to drive change for a better world by advancing business and communities.
AEV is a member of the United Nations Global Compact, Global Compact Network Philippines Board of Trustees, the APEC Business Advisory Council and the Council for Inclusive Capitalism, and helps champion sustainability initiatives on a regional level through policies, advocacies, and initiatives that contribute to the United Nations Sustainable Development Goals (UN SDGs). With a clear focus on ESG, the company is implementing its #OneAboitizSustainability Synergy model which transforms its life-essential businesses to improve sustainable practices and continue to create a positive impact on society and the environment.
Link to AEV’s website and release: https://aboitiz.com/investor-relations/disclosure/