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Coca-Cola to divest itself of China Bottling for roughly $1 billion

November 29, 2016
Food & Drink

Coca-Cola Co. said Thursday it reached a definitive agreement to divest its bottling stakes in China for roughly $1 billion, part of broader strategy to focus on its more profitable concentrate-making business.

The beverage giant currently owns roughly a third of its bottling in China, with the rest split roughly between Swire Beverage Holdings Ltd. and China Foods Ltd. China Foods is part of state-owned COFCO Ltd.

Under the agreement, Swire and China Foods each will own roughly half of Coke’s bottling operations in the Asian country. Atlanta-based Coke announced a tentative agreement in February to divest to the two partners.

Coke is in the midst of a global divestment drive and has been selling plants, warehouses and delivery trucks to bottling partners in a bid to cut costs amid slowing soda sales. The biggest divestment is in the U.S., where it has struck agreements to divest more than half of its bottling and plans to sell the remainder by the end of 2017.

Coke estimated earlier this year that its direct employees will shrink to 39,000 from 123,000 after it completes divesting bottling in North America, China, Germany and South Africa. Net revenue will drop to $28.5 billion from $44.3 billion but capital expenditures will be halved to $1.3 billion, based on 2015 figures.

China is Coke’s third-largest market by volume. The company and its bottling partners recently opened their 45th plant in the country and are in the midst of a $4 billion investment push.

The divestment in China remains subject to regulatory approvals.

By Mike Esterl

Spource: Wall Street Journal

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