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Mexican bottler, Coca-Cola FEMSA S.A.B. de C.V. (KOF - Snapshot Report) has entered into a definitive agreement to acquire another Mexico-based Coca-Cola bottler Grupo Yoli, S.A. de C.V. for $700 million.

Coca Cola Femsa will finance this transaction by issuing a net debt of 1,009 million pesos. Moreover, Grupo Yoli will receive approximately 42.4 million newly issued Coca Cola Femsa L series shares at 184.0 pesos per share.

Grupo Yoli was founded in 1918 and is a Coke bottler since 1938. The company sold about 99 million unit cases of beverages in 2012.

As part of the deal, Coca Cola Femsa will also get 10.14% stake in Promotora Industrial Azucarera, and thus boost its holding in the sugar producing company to 36.3%.

With this buyout, Coca Cola Femsa will get a strong foothold in the southern states of Mexico and will also get a substantial 69,000 client base of Grupo Yoli in the region, including Acapulco and Ixtapa Zihuatanejo, which are two of the most important tourist destinations in the coast of the Pacific Ocean.

Coca Cola Femsa will also get hold of 2 bottling facilities and 20 distribution centers owned by Grupo Yoli. The deal will extend Coca-Cola FEMSA’s reach to the state of Guerrero as well as in parts of the state of Oaxaca  the two markets in which Grupo Yoli primarily operates.

Coca Cola Femsa seems to be in an expansion spree via acquisitions. In December 2012, it bought 51% stake in The Coca-Cola Company’s (KO - Analyst Report) franchise bottler in Philippines, Coca-Cola Bottlers Philippines for $688.5 million in cash.

The Coca-Cola Company has ownership interests in many other bottling operations, including Coca-Cola Enterprises Inc. (CCE - Analyst Report), Coca-Cola Hellenic Bottling Company S.A. , and Coca-Cola Amatil Ltd. Currently, Coca Cola Femsa carries a Zacks Rank #2 (Buy).

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