As part of the agreement reached with local regulators, Coca-Cola Co (NYSE:KO) will offload its stake in the South African bottling plant for $669 million. The local investors get a stake in the bottling plant at a discounted rate.
The sale of a stake in the bottling plant helps the American drinks giant to comply with the policies in South Africa. It helps the blacks, who are deprived of wealth, to make a comeback and lead a prosperous life. Coca-Cola complies with the condition of the buyout of SABMiller, its partner, in 2016. SABMiller is now part of Anheuser-Busch InBev NV, the brewer.
The ownership of blacks will increase by 20%
Following the stake sale by Coca-Cola, the ownership of blacks in the bottling unit will move up by 20%. Employees’ stake in the plant will surge from 5% to 15%. The rest of the stake in the unit will be held by outside investors. The company employed Rothschild & Co as an advisor for the deal.
Serves 12 nations
Port Elizabeth based Coca-Cola Beverages Africa serves 12 nations that comprise Ghana, Ethiopia, and Kenya. The plant accounts for 40% of the drinks of the Atlanta based company in the continent.
Reports better than expected performance
Coca-Cola posted better than expected results in Q4 2020 on the backdrop of intelligent cost management practices and expanding adjusted profit margins. The company’s case volumes worldwide are under pressure during the quarter because of coronavirus cases resurgence.
In an appearance on the SSP (Squawk on the Street program) of CNBC, James Quincey, CEO of Coca-Cola said the company learned how to adapt to the market conditions during the pandemic and outperform. It posted revenues of $8.6 billion in Q4 2020. The pandemic forced the company to cut 11% of its positions.
Its adjusted earnings per share increased to $0.47 (up 6.8%) and crossed the analysts’ estimates of $0.42/share. The adjusted operating margin of Coca-Cola rose YoY to 27.35%. James said the company reported excellent progress in 2020 because of actions implemented to expedite transformation. It gave them confidence for the company to return to profits in 2021. Despite the uncertainties, the company expects to emerge as a strong player and offer rich dividends to the investors going forward.
The vaccination drive across the world to prevent the spread of coronavirus would help the companies to outperform soon.