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SABMiller, Coca-Cola Form Joint Bottling Venture in Africa

Published on Nov 27 2014 9:44 AM in General Industry

SABMiller, Coca-Cola Form Joint Bottling Venture in Africa

SABMiller and Coca-Cola Co will combine bottling operations for non-alcoholic beverages in southern and eastern Africa, forming the continent’s largest Coca-Cola bottler with annual revenue of almost $3 billion.

SABMiller will hold 57 per cent of Coca-Cola Beverages Africa, with Coca-Cola holding 11.3 per cent, the London-based maker of Grolsch and Peroni said in a statement today. The rest will be owned by the majority owner of Coca-Cola’s bottling partner in South Africa.

SABMiller is increasing its focus on soft drinks and non-alcoholic beverages as global demand for beer stagnates and targets for consolidation become harder to find. The combined entity will tap into the continent’s “significant growth potential,” according to the Peroni maker, which in September had an offer for Heineken rejected by the Dutch brewer.

“If you are on the African continent in beer, you want to have soft-drink exposure,” Brendan Grundlingh, an analyst at SBG Securities in Johannesburg, said by phone. “This aligns all the parties’ interests behind the growth strategy.”

SABMiller rose 0.2 per cent to 3,519.5 pence at 9:56 a.m. in London, extending this year’s gain to 14 per cent.

The pact with Coca-Cola will present a potential burden for Anheuser-Busch InBev NV should it seek to acquire SABMiller, according to Jonathan Fyfe, an analyst at Mirabaud Securities in London. SABMiller has long been regarded by analysts as a possible takeover target for AB InBev, which is PepsiCo Inc.’s bottling partner in Latin America.

Bloomberg News edited by HI

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