Coca-Cola to divest Vietnam and Cambodia facilities to Swire Pacific

ASIA – Coca-Cola has put its bottling operations in Vietnam and Cambodia on the deal table of Swire Pacific, a Hong Kong-based international conglomerate, for US$1.015 billion.

Swire said the deal will expand the group’s beverages business into one of the most rapidly growing beverages markets.

This would be the marking progress of the Hong Kong conglomerate’s first expansion into the Southeast Asian beverages market.

The deal is been carried out via two Swire Pacific subsidiaries – Swire Coca-Cola Limited and Swire Beverages Holdings Limited.

Coca-Cola (Japan) Co. Ltd., an indirect, wholly-owned subsidiary of Coca-Cola, is the selling party.

Swire Pacific revealed the transaction will be funded through its “internal resources and existing banking facilities”.

Subject to anti-trust approval, the acquisition is expected to be completed within six months.

The 206-year-old Swire, one of the two remaining British trading houses in Hong Kong, has been redirecting investment into key operations including beverages and property, two of its most profitable businesses.

Swire Coca-Cola, one of the largest Coca-Cola bottlers in the world, has exclusive rights to manufacture, market, and distribute Coke products in Hong Kong, Taiwan, parts of mainland China and the US.

The group manufactures 62 beverage brands and distributes them to 762m people worldwide, according to its website.

The conglomerate is also expanding into emerging sectors like health care after it made an associate investment in Shenzhen New Frontier United Family Hospital, a new premium private hospital being developed in Shenzhen.

This acquisition proves a long-standing relationship that Swire has had with Coca-Cola that led to the snap-up of the soft-drink maker’s bottling operations in southern China in 2016.

The acquisition was from China Foods, part of Chinese state-owned group COFCO, for CNY5.87billion (then US$852m).

The group also acquired the 12.5% of drinks venture Swire Beverages which was still under the ownership of Coca-Cola.

The beverages division reported a record net income that jumped 23 percent year on year to HK$2.5 billion (US$320M) in 2021.

The whole company also returned to profitability by reporting a profit of HK$5.3 billion (US$675.1M), compared with a loss of HK$3.9 billion in 2020.

Swire Pacific has also divested in recent years some major assets as part of its re-direction to remain competitive.

Among the move is Swire Pacific Offshore Holdings Ltd., which Tidewater Inc. agreed to buy in March for US$190 million, partly in cash and partly in warrants.

In 2020, Swire Properties Ltd. agreed to sell a stake in a Hong Kong office tower to private equity firm Gaw Capital Partners for almost US$1.3 billion.

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Further Reading:

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