The world’s biggest beer and soda makers struck a deal Wednesday, but the transaction wasn’t a long-rumored merger of the two companies.
Anheuser-Busch InBev has agreed to sell its 54.5 percent equity stake in Coca-Cola Beverages Africa to the soda-making goliath for $3.15 billion. ABI had acquired the business in October as part of its $100 billion takeover of rival SABMiller.
As part of the deal, which is subject to regulatory approvals and is expected to close before the end of 2017, Coca-Cola will temporarily retake control of business interests in South Africa, Namibia, Kenya, Uganda, Tanzania, Ethiopia, Mozambique, Ghana, Mayotte and Comoros until they can be “refranchised to other partners,” the company said in a release.
The move marks ABI’s latest divestiture of various SABMiller assets, which has quickly helped the company recover more than a quarter of the $100 billion it paid for the South African beer company. A majority of that came when ABI sold SABMiller’s 58 percent stake in the MillerCoors joint venture to Molson Coors for $12 billion.
Earlier this month, ABI agreed to sell SABMiller’s Central and Eastern European assets — including Pilsner Urquell, Tyskie and Lech — to Tokyo-based Asahi Group Holdings for $7.8 billion. At the time of that deal, Asahi had already agreed to buy the Grolsch, Meantime and Peroni brands, along with SABMiller’s operations in Britain, Italy and the Netherlands for $2.9 billion from ABI.
Also this month, ABI agreed to the sale of its 26.4 percent stake South African alcoholic beverage company, Distell Group, to the Public Investment Corporation (SOC) Limited.
In March, ABI sold SABMiller’s stake in Beijing’s CR Snow to government-owned China Resources Beer for $1.6 billion.
Wednesday’s deal had been expected since October, when Coca-Cola, at the closure of the MegaBrew merger, said it would exercise its right to reclaim the African business.
In a joint statement, executives from both companies applauded the speed in which the deal came together.
“We are happy that we have been able to reach this agreement with the Coca-Cola Company in a timely manner and with a satisfactory outcome for all parties,” Carlos Brito, the CEO of ABI said in a press release.
“We are pleased to have reached an agreement quickly that is in everyone’s best interests,” added Coca-Cola chairman and CEO Muhtar Kent added.
In a separate transaction, Coca-Cola also acquired A-B InBev’s bottling operation interests in Zambia, Zimbabwe, Botswana, Swaziland, Lesotho, El Salvador and Honduras for an undisclosed sum, according to the release.
For his part, Kent said Coca-Cola planned to move forward with its “long-term strategic plan” in what he called “important growth markets.”
“We are continuing negotiations with a number of parties who are highly qualified and interested in these bottling territories and look forward to refranchising these territories as soon as practical following regulatory approval,” he said.
Coca-Cola has long been rumored to be the next target an M&A-minded ABI. In its report on today’s move, Reuters highlighted the chatter that ABI might make a play for the world’s largest soft-drink maker.
“With little room left for AB InBev to grow meaningfully in beer, chatter among bankers has turned to whether the deal-hungry mega brewer will eventually move into soft drinks,” the news service reported. “That could put Coke at the top of its list, though Coke’s $180 billion market value would be a huge hurdle.”
ABI has already demonstrated an interest in expanding within the non-alcoholic beverage sector. Earlier this year, it detailed plans to expand its portfolio to include more “no- or lower-alcohol” options and the company aims to have at least 20 percent of its global beer volumes coming from those products by 2025. Also, in June, ABI announced plans to manufacture and distribute ready-to-drink bottled teas under the Starbucks-owned Teavana brand. The first RTD Teavana label is expected to launch in early 2017.