Personal Finance

Instant Analysis: The Coca-Cola Co to Acquire Soy Beverage Maker for $575 Million


What happened?

Coca-Cola (NYSE: KO) has traveled far south of our borders for its latest acquisition. In conjunction with an affiliate, Mexican bottler Coca-Cola FEMSA (NYSE: KOF) , the beverage giant reached an agreement with global consumer goods giant Unilever (NYSE: UL) to buy the latter's AdeS -- a maker of soy-based drinks headquartered in Argentina. The price of the purchase is roughly $575 million.


Does it matter?

The deal makes sense for all parties involved. Unilever is itching to exit the comestibles business in favor of higher-margin consumer goods categories, while Coca-Cola needs to (sorry) juice its growth, and Coca-Cola FEMSA is the logical partner for the deal. Although a niche product, AdeS has a good presence in its region, posting sales of around $284 million in 2015.

For Unilever, the divestment is the latest in a series of brand sell-offs. The company has recently unloaded such well-known brands as Slim-Fast diet drinks and Ragu pasta sauce. The company's shares rose slightly after the deal was announced.

The stock price of Coca-Coca was largely unaffected, likely because an asset the size of AdeS is a drop in the bucket of a company with 20 brands that bring in more than $1 billion in annual sales apiece.

That said, AdeS should complement its brand lineup nicely in a region that has great potential for growth. And for Unilever, the deal is another step toward its goal of divesting away from food and beverage products.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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