Coca-Cola HBC buys control of Africa bottling business for $2.6 billion in expansion drive

By Yamini Kalia (Reuters) -Swiss-based bottler Coca-Cola HBC on Tuesday said it has agreed to buy a 75% stake in its African counterpart for $2.6 billion, creating the world's second-largest Coca-Cola bottling partner by beverage volume. Coca-Cola HBC will acquire U.S.-based Coca-Cola's roughly 42% stake in Coca-Cola Beverages Africa (CCBA) and the Gutsche Family Investments' entire stake, valuing the African bottler at $3.4 billion, according to company statements. The transaction puts the renewed group second behind Coca-Cola FEMSA by Coca-Cola bottling volumes and expands Coca-Cola HBC's footprint in Africa, targeting growing demand in 14 new markets driven by younger consumers. Coca-Cola HBC will represent two-thirds of Africa's total Coca-Cola volume, including drinks such as Fanta, Sprite and Monster, and cover more than 50% of the continent's population, according to J.P. Morgan. "ACQUISITION IS ABOUT GROWTH" "Coca-Cola HBC is a strong and valued bottler that will help usher in the next chapter of growth for CCBA," said Coca-Cola Chief Operating Officer Henrique Braun. The Atlanta, U.S.-based beverage giant owns about 23% of Coca-Cola HBC. The deal for control of CCBA, founded in 2014, will be one of the biggest ever in Africa's consumer goods space, according to Rothschild, the sole adviser to Coca-Cola. "This acquisition is about growth," Coca-Cola HBC CEO Zoran Bogdanovic said during a media call, highlighting the company's commitment to Africa. Coca-Cola HBC, which is already listed in London and Athens, intends to pursue a secondary listing on the Johannesburg Stock Exchange, and it has an option to buy Coca-Cola's remaining 25% stake in CCBA within six years. EMERGING MARKETS LEAD COCA-COLA HBC'S PORTFOLIO Coca-Cola HBC's emerging markets portfolio, comprising some African, Eastern European and Balkan countries, leads its volumes and sales. However, none represent more than 20% of sales volumes, according to its website. The latest deal comes as the group tries to offset cost pressures from concerns surrounding U.S. tariffs that have weighed on consumer sentiment globally. The expansion will also help it make up for lost volumes from its 2022 exit from Russia, one of the group's largest and most profitable markets at the time. Separately on Tuesday, Coca-Cola HBC maintained its annual sales outlook despite reporting a smaller-than-expected 5% rise in third-quarter organic revenue. Its London-listed shares fell as much as 4.7%, before paring losses to be down 1.2% by 1105 GMT. Goldman Sachs and UBS were advisers to Coca-Cola HBC, while Nomura alone advised GFI. (Reporting by Yamini Kalia and Raechel Thankam Job in Bengaluru; Writing by Pushkala Aripaka; Editing by Alexander Smith and Hugh Lawson)

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