Coca-Cola likely to accept AB InBev as new African bottling partner, says Analyst

The Coca-Cola Company (Parent Co) is likely to agree to Anheuser-Busch InBev (AB InBev) becoming its new African bottling partner after the takeover of SABMiller, an analyst has said.

AB InBev is on course to becoming the new owner of the Coca-Cola Beverages Africa (CCBA), a merger of Coca-Cola bottling operations in Southern and Eastern Africa with SABMiller’s soft drinks business and Coca-Cola SABCO, which is wholly owned by the Gutsche Family Investments (GFI).

The formation of Coca-Cola Beverages Africa (CCBA) was initially announced in November 2014, before the $108bn takeover of SABMiller by AB InBev. However, Coca-Cola (Parent Co) has change-of-control clauses that would allow it to buy back SABMiller’s soft drinks assets if it wished and sell them to someone else.

Stifel’s Mark Swartzberg said recently that Coca-Cola was unlikely to initiate such a move but will instead accept AB InBev as the new suitor. This he says would be consistent with Coca-Cola’s actions to reduce its “asset intensity” as opposed to buying back SABMiller’s assets which could cost it about $4bn.

Coca-Cola is expected to announce its decision on the Coca-Cola Beverages Africa stake before the end of the second quarter, Swartzberg said.

Coca-Cola has been consolidating its operations worldwide in the last few years to trim cost. In the US, it has been re-franchising its bottler network, while in Europe, it engineered the coming together of three Coca-Cola bottling franchises, Coca-Cola Enterprises as the bottler group, Coca-Cola Erfrischungsgetranke, the German bottling unit and Coca-Cola Iberian Partners, to form what is known as Coca-Cola European Partners, the largest Coca-Cola bottling operation in the world.

Coca-Beverages Africa (CCBA) is still awaiting regulatory approval from the South African competition tribunal, although it inched closer last month when the South African Competition Commission gave its conditional approval.

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