Swire Pacific to Take Over Coca-Cola (NYSE:KO) Bottling Plant in China

213

The Swire Group (HKG:0019) with diversified business interests in agriculture, road transport, oil cold storage, and deep-sea fishing, is taking over the bottling assets of Coca-Cola (NYSE:KO) in China in a deal that is worth about $1 billion. Currently, the Coca-Cola bottling assets are with China Foods Ltd., and Cofco Corp.

The talks are presently in the final stages. The deal announcement could happen later this week, according to Bloomberg. Observers are saying, however, that there is a chance that the negotiations could still fall apart.

China Foods Wants to Sell Assets in South China

The possibility of this sale has been in the news for some time, ever since China Foods announced last August that they might sell off the Coca-Cola business. Most of the bottling units are located in southern China, in Guangdong, Fujian, and Hainan provinces. There are some in north China as well, in Tianjin, Inner Mongolia, and Beijing. China Foods wants to keep these assets for the time being at least.

China Foods, Coca-Cola China, or Swire Pacific was not available for any immediate comments.

The Swire Group is based out of London, UK, but has a strong market presence in Asia, mostly Hong Kong. The group works with Coca-Cola (NYSE:KO) already, and is in fact, one of the largest of their bottlers in the world. The London firm also works with Coca-Cola for marketing and brand development.

It Could Be a Good Acquisition for the Swire Group

Swire is making the right moves, and the deal, if it eventually goes through, will give them important assets in the country.

The middle class in China is increasingly moving towards foreign brands, from beverage products, food items to fashion apparel. Sales are going up. With this acquisition revenues of the Swire Pacific (HKG:0019) will surely go up as well.

The stock was trading 0.46 percent up in the Hong Kong marker by the end of Thursday’s trading. China Foods, on the other hand, recovered from early losses and ended the day at 0.5 percent lower. Earlier, the stock had gone down by 3.7 percent.

After the agreement, Swire’s hold over Coca-Cola’s bottling will grow in the central and southern parts of the country. There are at present 11 plants in the south. Incidentally, Swire Pacific agreed to purchase production and distribution assets of Coca-Cola in three US states for $170.1 million last month.