Coca-Cola Femsa SAB, the largest bottler of the beverage in Latin America, agreed to buy Brazil’s Spaipa SA Industria Brasileira de Bebidas in a cash deal with a total transaction value of US$1.86 billion.
The deal, Coca-Cola Femsa’s second acquisition in Brazil in less than three months, will bolster its volume in South America’s largest nation by 40 percent, the Mexico City-based bottler said in a statement on Saturday.
When the purchase closes, subject to approval by Brazil’s antitrust authority, the Mexican bottler said it would account for 39 percent of the Coca-Cola system’s volume in Brazil.
The Spaipa deal is Coca-Cola Femsa’s largest since it announced the US$3.6 billion acquisition of Miami-based Panamerican Beverages Inc, or Panamco, in 2002, according to data compiled by Bloomberg, and it follows a US$4 billion shopping spree in Mexico, Brazil and the Philippines started in June 2011.
The Spaipa acquisition provides a “perfect geographic fit,” Coca-Cola Femsa said in the statement, linking the Mexican bottler’s distribution territories in the states of Sao Paulo and Mato Grosso do Sul.
Spaipa, Brazil’s second-largest closely held Coca-Cola bottler, sold 236 million unit cases of beverages, including beer, last year, generating sales of US$929 million and US$152 million in earnings before interest, taxes, depreciation and amortization, a profit measure known as Ebitda, Coca-Cola Femsa said.
Regulatory changes and “a generally weak consumer environment” hurt Spaipa and Coca-Cola Femsa’s Brazil operations in recent quarters, according to the Mexican bottler.
Coca-Cola Femsa said it expected US$33 million in Ebitda gains from the transaction in the next 18 to 24 months, from transportation, reductions in administrative expenses and other measures. Spaipa has operations in the states of Sao Paulo and Parana, with four bottling plants, seven distribution centers and more than 6,000 employees serving almost 17 million consumers, Coca-Cola Femsa said.
The deal has been ratified by Coca-Cola Femsa’s board of directors and the company said it would also seek approval from Atlanta-based Coca-Cola Co.
Coca-Cola Femsa will finance the Spaipa purchase with new bank debt for which the Mexican company has already obtained commitments, it said. After the deal, the Coca-Cola Femsa’s net debt will be 1.6 times Ebitda, it said.
The bottler has a credit rating of “A-” from Standard & Poor’s, the seventh-highest investment grade level and four steps above junk.
The company announced its first foray into Asia this year as it bought a controlling stake in Coca-Cola’s Philippines bottling operation. It has acquired four Mexican bottlers since June 2011 and closed the US$448 million acquisition of Brazil’s Cia Fluminense de Refrigerantes last month.
Coca-Cola Femsa chief executive officer Carlos Salazar and chief financial officer Hector Trevino will hold a conference call to discuss the transaction tomorrow at 12pm in Mexico City.
Contract chipmaker United Microelectronics Corp (UMC, 聯電) yesterday said it has signed a memorandum of understanding (MOU) with Polar Semiconductor LLC to collaborate on the production of 8-inch wafers in the US. The collaboration aims to strengthen 8-inch wafer manufacturing in the US amid Washington’s efforts to increase onshore manufacturing of semiconductors, contribute to supply chain resilience against shifting geopolitical dynamics, and ensure a secure domestic supply of power semiconductors critical to automotive, electric grids, robotic manufacturing and data centers, the companies said in a joint statement. Under the MOU, Polar and UMC will identify devices for Polar to manufacture at
TARIFF TALKS: The US secretary of commerce is eyeing more than US$300 billion in investments and said Taiwan would train US workers, but Taipei has denied the latter US Secretary of Commerce Howard Lutnick said the US is expecting a large investment pledge from Taiwan in trade talks, while President William Lai (賴清德) listed areas that need improvement in order for projects to be completed. “We’re in the midst of discussions,” Lutnick said on Wednesday. “But the fact is, this administration’s goal is to bring semiconductor manufacturing to America.” Lai on Wednesday said Taiwan is supportive of US President Donald Trump’s goal of reindustrializing the US, including efforts to ramp up semiconductor production. Such a goal would require the US to reduce its reliance on Taiwan as a key source
The demise of the coal industry left the US’ Appalachian region in tatters, with lost jobs, spoiled water and countless kilometers of abandoned underground mines. Now entrepreneurs are eyeing the rural region with ambitious visions to rebuild its economy by converting old mines into solar power systems and data centers that could help fuel the increasing power demands of the artificial intelligence (AI) boom. One such project is underway by a non-profit team calling itself Energy DELTA (Discovery, Education, Learning and Technology Accelerator) Lab, which is looking to develop energy sources on about 26,305 hectares of old coal land in
Netflix on Friday faced fierce criticism over its blockbuster deal to acquire Warner Bros Discovery. The streaming giant is already viewed as a pariah in some Hollywood circles, largely due to its reluctance to release content in theaters and its disruption of traditional industry practices. As Netflix emerged as the likely winning bidder for Warner Bros — the studio behind Casablanca, the Harry Potter movies and Friends — Hollywood’s elite launched an aggressive campaign against the acquisition. Titanic director James Cameron called the buyout a “disaster,” while a group of prominent producers are lobbying US Congress to oppose the deal,
RSS