Coca-Cola HBC agrees to acquire Coca-Cola Beverages Africa

Core Viewpoint - Coca-Cola HBC has agreed to acquire a 75% stake in Coca-Cola Beverages Africa (CCBA) for US$2.6 billion, valuing CCBA at US$3.4 billion, which will create the world's second-largest Coca-Cola bottling partner by volume and expand Coca-Cola HBC's presence in high-growth African beverage markets [1][2]. Group 1: Transaction Details - The acquisition is expected to be completed by the end of 2026, pending approvals, with Gutsche Family Investments receiving new shares equivalent to 5.47% of the enlarged share capital [2]. - An option agreement allows Coca-Cola HBC to buy or The Coca-Cola Company to sell the remaining 25% of CCBA after the transaction is completed [2]. Group 2: Market Impact - CCBA operates in 14 African markets and accounts for approximately 40% of Coca-Cola system volumes in Africa, with Coca-Cola HBC estimating that the combined entity will represent about two-thirds of Africa's Coca-Cola system volume and cover over half of the continent's population [3]. - On a pro forma basis for 2024, the combined group is projected to produce 4.0 billion unit cases, generating revenues of €14.1 billion and EBIT of €1.4 billion [3]. Group 3: Strategic Rationale - The management emphasizes demographic and macroeconomic factors driving the CCBA acquisition, including rapidly growing populations and a significant under-30 consumer base in CCBA's markets [5]. - The acquisition is seen as a way to enhance diversification, increase exposure to emerging markets, and support per-capita consumption growth [5]. Group 4: Operational Integration - Coca-Cola HBC plans to implement its operating model, route-to-market capabilities, and sustainability initiatives alongside CCBA's portfolio of over 40 global and local brands [6]. - This acquisition is viewed as a natural extension of Coca-Cola HBC's established presence in Nigeria and its recent entry into Egypt, facilitating the sharing of best practices across African markets [6]. Group 5: Financial Considerations - Coca-Cola HBC anticipates low single-digit earnings per share accretion in the first full year post-completion, with leverage expected to be at the upper end of the medium-term target range of 1.5x–2.0x net debt to EBITDA [7]. - The existing share buyback program has been canceled to prioritize this transaction [7].