Swire Pacific Ltd, a Hong Kong based multinational, has announced that it has put in a successful bid for the Chinese Coca-Cola bottling unit said by inside sources to be worth around $800 million.
The company is betting on an upturn in soda beverage consumption in mainland China and this is the company’s first move into the bottling market.
The bottling operations are currently run by state-owned food firm COFCO Corp and their subsidiary China Foods Ltd, and Swire said it would purchase mainland distribution and manufacturing assets as well as the 13 percent stake it does not own in the non-alcoholic drinks firm Swire Beverages Ltd from Coca-Cola for an extra 1 billion yuan.
According to sources the deal, which was negotiated in January and finalized last week, still needs to be passed by sector watchdogs.
“There are some very attractive growth opportunities in China for the non-alcoholic drinks industry,” said a company statement. “With the increase in urbanization and the growing popularity of ready-made soft drinks in the country we feel it is better for Swire to be active here than in developed markets. Consumption here is still low but we feel that figure could increase dramatically in the next 5-10 years.”
One of Coca-Cola’s investment partners inside the mainland, CTI China Renaissance, said the soft drink giant will no longer concern itself with bottling interests in China.
Swire shares dropped 0.8 percent in Thursdays trading while China Foods slumped nearly 4 percent.
