SMC sells its Coke stake

ATLANTA-BASED COCA-COLA COMPANY NOW SOLE OWNER OF C.C.B.P.I.

By Honey Madrilejos-Reyes and Dennis Estopace

Reporters

THE sale of San Miguel Corporation’s (SMC) 65-percent ownership in Coca-Cola Bottlers Philippines, Inc. (CCBPI) to Atlanta-based Coca-Cola Company (TCCC) is now a done deal. This means TCCC is now the sole owner of CCBPI, entitling them with all voting and economic rights. SMC was previously the majority shareholder of CCBPI, which also owns Cosmos Bottling Company and Philippine Beverage Partners, Inc. The transaction is valued at $590 million. “Our partnership with SMC over the years has been extremely important to our business in the Philippines,” said TCCC president and chief operating officer Muhtar Kent Thursday in a statement. “We are grateful to SMC for its continuing support of our long-term commitment to the Philippines, and we look forward to continued cooperation with SMC, who will remain a key supplier to our business.” Kent flew in from Atlanta to formalize the purchase of San Miguel’s entire 65-percent stake in Coca-Cola Bottlers or CCBPI, which packages the contents manufactured in plants by wholly owned subsidiary Coca-Cola Exports Philippines Inc. He said CCBPI will now be fully integrated with TCCC’s overall objectives. “It will benefit from full access to our company’s management expertise in helping to operate bottling businesses,” he said. For his part, SMC chairman Eduardo Cojuangco Jr. said the sale of CCBPI supports San Miguel’s more focused business model, which means emphasizing on fully owned branded positions. “This transaction provides SMC the opportunity to focus on its core business areas in the Philippines and its planned expansion throughout the region,” added Cojuangco. He said SMC plans to develop its own domestic beverage business, producing juice drink and ready-to-drink tea that will complement existing operations in Thailand and Indonesia. The Atlanta, Georgia-headquartered The Coca-Cola Co. had fidgeted for two years with the erosion of its sales in the country before finally deciding to grab back the reins of its product from San Miguel. “In the short period of time, we’re going to give a lot of new focus on our brands, on certain channels,” Kent told reporters on Thursday after the formal signing of the $590-million deal that returned to Coca-Cola majority ownership of its bottling division. “I don’t want to deal with the financials right now but, yes, you have the figure right: that’s $590 million in exchange of shares and all other conditions,” Kent said. The second Coke buyback from San Miguel also includes purchase and ownership of Cosmos brand carbonated drink maker, Cosmos Bottling Inc. and the company that distributes the products, Philippine Beverage Partners Inc. Six years ago, San Miguel bought Coca-Cola’s stake in Australia-based Coca-Cola Amatil and folded PhilBev and Cosmos—which San Miguel bought from RFM Corp., also in 2001—under CCBPI. The century-old company that had its first international operation outside the United States in the Philippines placed new managers for the company-owned bottling operation under its Bottling Investment Group or BIG. Coke, which the American public called the syrup that Confederate veteran John S. Pemberton first cooked in his backyard in 1886, placed its former president for the South Africa operations David Lyons as chief executive officer of Big. In total, Coca-Cola placed 14 new members of its management team. “Don’t sleep on the job,” Kent said when asked what his marching order for this team is. He also promised that the whole operations of the CCBPI would remain intact and new assets would be acquired. CCBPI has 30 plants across the Philippines. However, when asked if the three companies would be retained as part of one structure, Kent said “We haven’t decided on streamlining but for the time being it [BIG] would be composed of the three companies.” The deal carries a noncompeting clause against San Miguel going into the sparkling beverage business, sports drinks, energy drinks and flavored water within a certain period. “We are very clear about these corridors and we will remain good friends with San Miguel,” Kent said, adding that the largest food and beverage conglomerate “would remain a key supplier to our business.” He, however, declined to reveal details.

 

http://www.businessmirror.com.ph/0223&242007/headlines01.html