Coca-Cola HBC Finance BV launched a bond offering on Thursday, seeking to raise at least €1.5 billion ($1.7 billion) to finance the acquisition of a controlling stake in Coca-Cola Beverages Africa and for general corporate purposes.
The financing entity of Coca-Cola HBC AG is marketing the bonds in three tranches, with maturities of 2.5, 4.5, and 7.5 years. Proceeds from the 4.5 and 7.5 year bonds will specifically support the $2.6 billion deal to acquire 75% of Coca-Cola Beverages Africa from The Coca-Cola Company and Gutsche Family Investments, according to a source familiar with the transaction.
The acquisition includes an option for Coca-Cola HBC to purchase the remaining 25% of Coca-Cola Beverages Africa within the next six years. This move represents a significant expansion for Coca-Cola HBC, a major bottler and distributor of Coca-Cola products, operating independently from The Coca-Cola Company, which focuses on syrup production and brand ownership.
The Coca-Cola Company has been strategically shifting away from direct ownership of bottling operations. Last year, the company sold a portion of its Indian bottling business to Reliance Industries, signaling a broader trend of streamlining its operations and focusing on its core competencies. This divestment strategy allows The Coca-Cola Company to concentrate on brand development and concentrate production, although relying on partners like Coca-Cola HBC for bottling and distribution.
The bond offering comes amidst a period of cautious activity in the European primary debt market, influenced by geopolitical instability in the Middle East. While new bond issuances have been limited in recent weeks, demand remains for investment-grade corporate debt, as evidenced by the Coca-Cola HBC offering.
Moody’s Ratings and S&P Global Ratings have assigned expected ratings of Baa1 and BBB+ respectively to the Coca-Cola HBC Finance BV bonds. Pricing for the bonds is expected to be finalized later on Thursday, providing further insight into investor appetite and market conditions. The Baa1 rating from Moody’s indicates moderate credit risk, while the BBB+ rating from S&P Global Ratings signifies adequate capacity to meet financial commitments.
Coca-Cola Beverages Africa operates in several countries across the African continent, including South Africa, Kenya, Uganda, and Mozambique. The acquisition will significantly expand Coca-Cola HBC’s geographic footprint and market share in Africa, a region with growing consumer demand for carbonated soft drinks and other beverages.
