Coke may split SABMiller’s stake in CCBA among several bottlers, says analysts

Atlanta-based Coca-Cola Company may split SABMiller’s 57% stake in Coca-Cola Beverages Africa (CCBA) among more than one franchise partner, according to analysts.

In a statement released by Coke after announcing its plan to buy-back SABMiller’s stake in CCBA, the company said, it would negotiate with “potential partners” to refranchise CCBA.

Coke is keen to find other buyers quickly for SABMiller’s stake so as to stay out of AB InBev’s crosshairs, who analysts say may be the brewer’s next acquisition target.

Coke is scared of an acquisition by AB InBev,” said Ali Dibadj, an analyst at Bernstein, in a story published in the Financial Times. “Thus we presume Coke would very much try to avoid giving AB InBev’s Carlos Brito a look under the hood of the company,” he added.

Possible contenders for the franchise, which grew 10% last year, making it the world’s second fastest-growing region, according to research group Canadean, include Coca-Cola Hellenic (Coca-Cola HBC), which operates in 28 European countries including Russia, Ukraine and Nigeria.

Dimitris Lois, Coca-Cola HBC chief Executive told analysts in May: “It was open to further acquisition in Africa if the right opportunity became available,” he said. He added that if “the right strategic opportunity” were to come along, it would “certainly (be) something we would consider.

Other possible contenders include Equatorial Coca-Cola Bottling Company, part-owned by Spain’s Duarela family, which already bottles for Coke in about a dozen West African and North African countries including Ghana, Equatorial Guinea, Gabon, Sierra Leone, among others.

Coca-Cola SABCO, the South African-based partner in Coca-Cola Beverages Africa (CCBA), owned by the Gutsche family is also a likely bidder, said analysts.

Coca-Cola European Partners (CCEP), the European bottler created last year by the merger of three European bottlers of Coke has also expressed interest in further expansion.

An analyst at Evercore ISI, Robert Ottenstein, said “There is a reasonable chance that an agreement could come in which Coca-Cola HBC would acquire some of the African assets and in return agree to sell Western European assets, such as Ireland, Austria, Switzerland and Italy, to Coca-Cola European Partners (CCEP).

An unlikely partner; however, would be Castel Group, the French beverage company with a shareholding interest in SABMiller’s African operations, which is now owned by AB InBev. Castel already bottles for Coca-Cola in mostly French speaking West Africa. It is unlikely the company would be asked to bid because it is also seen as a potential acquisition target for AB InBev.

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