Back to top

Analyst Blog

Mexican bottler Coca-Cola FEMSA S.A.B. de C.V. (KOF - Snapshot Report) 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 billion.

Coca-Cola FEMSA is co-owned by the Coca Cola Company (KO - Analyst Report) and Fomento Economico Mexicano S.A. (FMX - Analyst Report) also known as FEMSA. 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 Philippines.

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 Sul.

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 Cola’s peer Pepsico Inc. (PEP - Analyst Report) 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).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%