Coca-Cola FEMSA S.A.B. de C.V.
) has entered into a definitive agreement to take over the second
largest privately-owned bottler in the Brazilian Coca-Cola
system, Spaipa S.A. Industria Brasileira de Bebidas (Spaipa), to
augment its Brazilian business volume by 40% for $1.9
Coca-Cola FEMSA is co-owned by the
Coca Cola Company
Fomento Economico Mexicano S.A.
also known as
. It produces and distributes Coca-Cola, Fanta, Sprite, Del Valle
and other trademark beverages of The Coca-Cola Company. It also
distributes bottled water, juices, teas, isotonics, beer and
other beverages in Mexico, Guatemala, Nicaragua, Costa Rica,
Panama, Colombia, Venezuela, Brazil, Argentina and
The all-cash deal is to be financed with new bank debt, will
be geographically beneficial as it will link FEMSA's distribution
territories in the states of Sao Paulo and Mato Grosso do
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.
The acquisition, subject to approval of the Brazilian
antitrust authority, will accrue $33 million as earnings before
interests, taxes, depreciation and amortization (EBITDA) in the
coming 18 to 24 months to KOF.
FEMSA is on an acquisition spree and has been acquiring Coke
bottlers in the Latin American region for the last two years. In
January, the cola giant entered into a definitive agreement to
acquire Mexico-based Coca-Cola bottler Grupo Yoli, S.A. de C.V.
for $700 million.
Again in August, it acquired its Brazilian peer Companhia
Fluminense de Refrigerantes for $448 million in an all cash
transaction. The company is also expanding its operations beyond
Latin America and acquired a 51% interest in Coca-Cola Bottlers
Philippines, Inc. by 2013.
Beverage giants are fast expanding into emerging markets. Coca
) traded its bottling operations in China for a position in
Tingyi Holding's beverage business.
Currently, Coca-Cola FEMSA carries a Zacks Rank #3 (Hold).
FOMENTO ECO-ADR (FMX): Free Stock Analysis
COCA COLA CO (KO): Free Stock Analysis Report
COCA-COLA FEMSA (KOF): Free Stock Analysis
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