Coca-Cola Femsa buys Brazil’s Vonpar for $1 billion
Staff Writer |
Coca-Cola FEMSA said that its Brazilian subsidiary, Spal Industria Brasileira de Bebida (Spal), will acquire 100% of Vonpar.
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Vonpar is one of the largest privately owned bottlers in the Brazilian Coca-Cola system, for an aggregate enterprise value of R$3,578 million and an approximate equity value of R$3,508 million (which is subject to confirmation on debt, cash and other customary adjustments between signing and closing).
During the last twelve months ended June 30, 2016, Vonpar sold 190 million unit cases of beverages, including 23 million unit cases of beer, generating R$2,026 million in net revenues and an EBITDA of R$335 million.
The preliminary estimated amount of synergies to be captured from this transaction in the next 18 to 24 months is approximately R$65 million at the EBITDA level.
These synergies will result from reconfiguration of the logistic network, manufacturing optimization, efficiencies in administrative expenses and the implementation of Coca-Cola FEMSA’s commercial practices.
Vonpar’s footprint is a perfect geographic fit bordering Coca-Cola FEMSA’s operations in the state of Paraná, in the south of Brazil.
This franchise operates in the states of Rio Grande do Sul and Santa Catarina with 3 bottling facilities and 5 distribution centers and has close to 4,000 employees serving more than 15 million consumers. Our combined territories will allow Coca-Cola FEMSA to serve approximately 88 million consumers — 43% of the population in Brazil and 54% of its GDP.
This transaction will increase our volume in Brazil by 25%, allowing us to reach 49% of the Coca-Cola system’s volume in the country.
Of the equity value of approximately R$3,508 million; Spal will pay an amount of approximately R$1,730 million in cash at closing.
Additionally, Spal will pay at closing R$688 million in cash, which in a subsequent and separate transaction will be capitalized by the sellers into a recently incorporated Mexican company which will be merged into Coca-Cola FEMSA in exchange for approximately 27.9 million newly issued KOF series L shares at a value of Ps. 142.8 per share, determined with the weighted average 30?day share price prior to September 23, 2016.
At closing, Spal will issue a 3-year promissory note denominated and payable in cash in Brazilian Reals for the remaining balance of R$1,090 million.
This note will pay an annual interest rate of 0.375% plus or minus the depreciation or appreciation of the Brazilian Real relative to the U.S. Dollar, plus an additional amount in case the price of KOF shares is higher than Ps.178.5 per share plus the Additional Amount, a new Mexican company to be merged into Coca-Cola FEMSA in order to receive KOF publicly traded shares at a price of Ps. 178.5, which represents a premium of 25% of the previously mentioned share price of Ps. 142.8.
On a pro forma basis, after giving effect to such promissory note and the portion of the purchase price to be financed, our net debt to EBITDA ratio would be 2.18x, highlighting the solid financial position of the company.
The transactions referred above have been approved by the Board of Directors of Coca-Cola FEMSA and are subject to customary closing conditions and the approval or clearance of the respective authorities. Coca-Cola FEMSA will also seek the approval of The Coca-Cola company for this acquisition. ■