TIDMCCEP
RNS Number : 0405I
Coca-Cola Europacific Partners plc
02 August 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
2 August 2023
Coca-Cola Europacific Partners plc (CCEP) today announces it
has, together with Aboitiz Equity Ventures Inc. (AEV), entered into
a Letter of Intent to jointly acquire Coca-Cola Beverages
Philippines, Inc. (CCBPI), a successful business with attractive
profitability and growth prospects, from The Coca-Cola Company
(KO)
-- The proposed acquisition would build on CCEP's successful
expansion into Australia, Pacific & Indonesia (API) in 2021,
positioning it as the world's largest Coca-Cola bottler by both
revenue and volume, supporting its long-term growth strategy and
focus on driving shareholder value;
-- CCEP has signed a non-binding Term Sheet and is in advanced
discussions with AEV regarding a potential joint transaction, which
may lead to the acquisition of CCBPI from KO, based on a 60:40
ownership structure between CCEP and AEV; and
-- CCEP and AEV have entered into a non-binding Letter of Intent
with KO, setting out the terms on which CCEP and AEV propose to
acquire KO's 100% ownership in CCBPI, consistent with KO's stated
intent to divest bottling operations
CCEP's proposed acquisition of CCBPI, with AEV, one of the
leading conglomerates in the local market, offers a great
opportunity to co-acquire an established, well-run business with
attractive profitability and growth prospects.
The proposed transaction is a further step for CCEP to create a
more diverse footprint within its existing API business segment and
support Indonesia's transformation journey. It is aligned with
CCEP's aim of driving sustainable and stronger growth through
diversification and scale, and underpins the company's strategic
mid-term objectives.
CCEP and AEV's non-binding Letter of Intent with KO implies an
enterprise value (EV) for CCBPI of US$1.8 billion (on a debt free
cash free basis). The consideration would be paid in cash, which
would have a modest impact on CCEP's leverage; CCEP's guidance to
return to the top end of its Net Debt to Adjusted EBITDA range of
2.5-3.0 times by the end of FY23 would instead be expected to be
achieved during FY24. CCBPI delivered US$1.7(1) billion of revenue
and US$90(1) million of PBT in FY22.
As CCEP would be the majority owner (60%), it is expected to
consolidate CCBPI as of the acquisition date and establish a
non-controlling interest representing AEV's minority interest
(40%). The business would be governed by a Board of 5 members,
three appointed by CCEP and two by AEV. CCEP would also appoint the
CEO.
The proposed acquisition is subject to a number of conditions,
including satisfactory completion of due diligence (which is well
underway), the parties concluding definitive agreements and the
receipt of regulatory approvals.
There is, therefore, no certainty, at this stage, that the
acquisition of CCBPI will be entered into or completed and, as
such, further updates will be provided in due course. The potential
transaction, if entered into, would be expected to close around the
end of FY23.
About CCBPI and the market
Key highlights:
-- Solid underlying market macroeconomics
o 115m population(2) (13th globally) and 1.5%(2) p.a. population
growth, second largest market in Southeast Asia after Indonesia
o Stable GDP growth 6%(2) and a fast growing middle class
-- Large and growing NARTD category
o US$8bn(3) and expected to grow 10%(4) in value p.a.
o Established Sparkling category 55%(3) (volume and value)
-- Solid platform
o Delivered FY22 volume and revenue of 650mUC(6) and
US$1.7bn(1)
o Leading value shares across NARTD of 43%(5) and 69%(5) in
Sparkling
o Wide supply chain footprint with 19(6) manufacturing
plants
o Strong customer focus, servicing 1m(6) outlets
o 9k(6) highly engaged colleagues
o ESG focus
-- 50%(6) of sparkling in returnable glass bottles (RGB)
-- Growing rPET content and packaging collection rates
-- 40%(6) women in leadership
1. CCBPI management information prepared on the basis of US
GAAP, average 2022 USD/PHP FX rate of 54.4
2. External source: Philippine Statistics Authority
3. External source: Euromonitor, 2022
4. External source: Euromonitor, 2022-2027 CAGR
5. External source: Nielsen, 2022
6. CCBPI management information
About CCEP (LEI 549300LTH67W4GWMRF57)
CCEP is one of the leading consumer goods companies in the
world. We make, move and sell some the world's most loved brands -
serving 600 million consumers and helping 1.75 million customers
across 29 countries grow their business.
We combine the strength and scale of a large, multi-national
business with an expert, local knowledge of the customers we serve
and communities we support.
The Company is currently listed on Euronext Amsterdam, the
NASDAQ Global Select Market, London Stock Exchange and on the
Spanish Stock Exchanges, trading under the symbol CCEP.
For more information about CCEP, please visit www.cocacolaep.com
& follow CCEP on Twitter at @CocaColaEP.
About AEV
AEV is one of the leading conglomerates in the Philippines with
over 100 years of business history. It has major investments in
power, banking and financial services, food, infrastructure, land,
and data science and artificial intelligence. AEV is recognized as
one of the best-managed companies in the Philippines and the
region, consistently cited for its commitment to good corporate
governance and sustainability. Currently, the company is on its
Great Transformation journey to become the Philippines' first
Techglomerate as it continues to drive change for a better world by
advancing business and communities.
AEV is a member of the United Nations Global Compact, Global
Compact Network Philippines Board of Trustees, the APEC Business
Advisory Council and the Council for Inclusive Capitalism, and
helps champion sustainability initiatives on a regional level
through policies, advocacies, and initiatives that contribute to
the United Nations Sustainable Development Goals (UN SDGs). With a
clear focus on ESG, the company is implementing its
#OneAboitizSustainability Synergy model which transforms its
life-essential businesses to improve sustainable practices and
continue to create a positive impact on society and the
environment.
Link to AEV's website and release:
https://aboitiz.com/investor-relations/disclosure/
Conference call
CCEP is hosting a conference call with investors and analysts to
discuss this announcement alongside its half year results today at
10:30 BST, 11:30 CEST & 5:30 a.m. EDT accessible via
www.cocacolaep.com. The call will be accompanied by a presentation.
An audio replay in downloadable digital format and a transcript of
the call will be available on the website as soon as possible
following the call.
Advisers
Rothschild & Co are acting as financial adviser to CCEP.
Slaughter and May and Villaraza & Angangco are acting as legal
counsel to CCEP.
Enquiries
General Counsel and Company Secretary: Clare Wardle;
secretariat@ccep.com
Investor Relations: Sarah Willett; sarah.willett@ccep.com
Media: ccep@portland-communications.com
The person responsible for arranging the release of this
announcement on behalf of the Company is Clare Wardle, General
Counsel and Company Secretary.
Forward-Looking Statements
This document contains statements, estimates or projections that
constitute "forward-looking statements" concerning the financial
condition, performance, results, guidance and outlook, dividends,
consequences of mergers, acquisitions, joint ventures, and
divestitures, including the proposed joint venture with Aboitiz
Equity Ventures Inc. (AEV) and acquisition of Coca-Cola Beverages
Philippines, Inc. (CCBPI), strategy and objectives of Coca-Cola
Europacific Partners plc and its subsidiaries (together CCEP or the
Group). Generally, the words "ambition", "target", "aim",
"believe", "expect", "intend", "estimate", "anticipate", "project",
"plan", "seek", "may", "could", "would", "should", "might", "will",
"forecast", "outlook", "guidance", "possible", "potential",
"predict", "objective" and similar expressions identify
forward-looking statements, which generally are not historical in
nature.
Forward-looking statements are subject to certain risks that
could cause actual results to differ materially from CCEP's
historical experience and present expectations or projections. As a
result, undue reliance should not be placed on forward-looking
statements, which speak only as of the date on which they are made.
These risks include but are not limited to:
1. those set forth in the "Risk Factors" section of CCEP's 2022
Annual Report on Form 20-F filed with the SEC on 17 March 2023 and
as updated and supplemented with the additional information set
forth in the "Principal Risks and Risk Factors" section of this
document;
2. risks and uncertainties relating to the global supply chain,
including impact from war in Ukraine and increasing geopolitical
tension including in the Asia Pacific region, such as the risk that
the business will not be able to guarantee sufficient supply of raw
materials, supplies, finished goods, natural gas and oil and
increased state-sponsored cyber risks;
3. risks and uncertainties relating to the global economy and/or
a potential recession in one or more countries, including risks
from elevated inflation, price increases, price elasticity,
disposable income of consumers and employees, pressure on and from
suppliers, increased fraud, and the perception or manifestation of
a global economic downturn;
4. risks and uncertainties relating to potential global energy
crisis, with potential interruptions and shortages in the global
energy supply, specifically the natural gas supply in our
territories. Energy shortages at our sites, our suppliers and
customers could cause interruptions to our supply chain and
capability to meet our production and distribution targets;
5. risks and uncertainties relating to potential water use
reductions due to regulations by national and regional authorities
leading to a potential temporary decrease in production volume;
and
6. risks and uncertainties relating to the proposed joint
venture with AEV and acquisition of CCBPI, including the risk that
the proposed transactions may not be consummated on the currently
contemplated terms or at all, or that our integration of CCBPI's
business and operations may not be successful or may be more
difficult, time consuming or costly than expected.
Due to these risks, CCEP's actual future financial condition,
results of operations, and business activities, including its
results, dividend payments, capital and leverage ratios, growth,
including growth in revenue, cost of sales per unit case and
operating profit, free cash flow, market share, tax rate,
efficiency savings, achievement of sustainability goals, including
net zero emissions and recycling initiatives, capital expenditures,
the results of the acquisition of the minority share of our
Indonesian business, our agreements relating to and results of the
proposed joint venture with AEV and acquisition of CCBPI, and
ability to remain in compliance with existing and future regulatory
compliance, may differ materially from the plans, goals,
expectations and guidance set out in forward-looking statements.
These risks may also adversely affect CCEP's share price.
Additional risks that may impact CCEP's future financial condition
and performance are identified in filings with the SEC which are
available on the SEC's website at www.sec.gov. CCEP does not
undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise, except as required under applicable
rules, laws and regulations. Any or all of the forward-looking
statements contained in this filing and in any other of CCEP's
public statements may prove to be incorrect.
End
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