Strategy

Coca-Cola Femsa Buys Brazilian Bottler for $1.1B

The acquisition of Vonpar will make Femsa the largest volume distributor of Coke in Brazil, with a 49% market share.
Matthew HellerSeptember 23, 2016

Mexico’s Coca-Cola Femsa said Friday it had agreed to acquire one of Brazil’s biggest private bottlers, Vonpar, in a $1.1 billion deal that will make it the largest distributor of Coke in Brazil by volume.

Vonpar will complement Femsa’s existing operations in the south of Brazil. The company produces and distributes Coke, Fanta, Kuat, Del Valle, and other Coca-Cola brands in the states of Santa Catarina and Rio Grande do Sul.

The deal, Femsa’s third and biggest largest in Brazil in three years, will expand Femsa’s volume in Brazil by 25%, bringing it to 49% of the market. With Vonpar, Femsa, already the largest Coke bottler in Latin America, will serve 43% of Brazil’s population.

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“We are excited to continue consolidating our leadership position in Brazil,” Femsa CEO John Santa Maria said in a news release, adding that the deal “will enable us to capture significant synergies and economies of scale.”

Vonpar was founded in 1948, producing and distributing Laranjinha, a local brand of soft drinks, in Rio Grande do Sul. It currently operates three bottling plants and five distribution centers, employing about 4,000 people and serving 15.4 million customers.

For the 12 months ended June 30, the company sold 190 million unit cases of beverages, including 23 million unit cases of beer, generating 2.026 billion reais ($630 million) in revenue and 335 million reais ($134 million) in EBITDA.

Femsa’s Brazilian unit Spal will pay 1.73 billion reais to Vonpar’s owners as well as another 688 million reais that will be converted into Coca-Cola Femsa shares. It will also issue 1.09 billion reais in convertible three-year debt to Vonpar’s owners.

The companies estimate cost savings in the next 12 to 18 months of 65 million reais in EBITDA from reconfiguration of the logistics network, manufacturing optimization, administrative expenses, and the implementation of Femsa’s commercial practices. Femsa already operates in southern Brazil in the state of Paraná.