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Proposed acquisition of Coca-Cola Beverages Philippines

Coca-Cola Europacific Partners plc (CCEP) has announced 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).

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$1.7 billion of revenue and ~US$90 million of PBT in FY22.

As CCEP would be the majority owner (60 per cent), it is expected to consolidate CCBPI as of the acquisition date and establish a non-controlling interest representing AEV’s minority interest (40 per cent).

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.

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