Aboitiz Equity Ventures [AEV 52.05, 4.5%; 191% avgVol] [link] announced that it has signed a letter of intent with Coca-Cola Europacific Partners PLC to purchase 100% of Coca-Cola Beverages Philippines (CCBP) from The Coca-Cola Company (Coke) for US$ 1.8 billion (~P100 billion). The ownership split will be 60:40, with AEV owning the 40% stake. For Coke, this deal allows it to continue divesting from its regional bottling operations. For AEV, the deal represents a “great opportunity to co-acquire an established, well-run business with attractive profitability and growth prospects”.
MB bottom-line: This deal is at the non-binding “letter of intent” stage, which operates (in most jurisdictions) a lot like a memorandum of understanding: it provides a loose roadmap of what a potential deal could look like, and how the parties could arrive at that final deal. AEV said that there are still plenty of hoops to jump through, including getting the approval of the Philippine Competition Commission, so it could take the parties until the end of 2023 to close this deal. It was interesting to see the main points that AEV provided as context for the deal were macroeconomic in nature: we have a huge population (2nd largest in SE Asia), with “stable” real economic growth, and “fast growing middle class and ~1.5% pa population growth”. Translation: over time, more and more people will make enough money to afford CCBT products, and make more and more people who will eventually consume CCBT products.
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