Business

Coca-Cola Icecek of Turkey acquires Bangladesh Beverages for $130 million

A Turkish beverage company, Coca-Cola Icecek (CCI), has reached a $130 million agreement to acquire Coca-Cola Bangladesh Beverages Ltd (CCBB). 

CCBB is involved in manufacturing, marketing, and distributing Coca-Cola brands nationally as one of the two bottlers in Bangladesh. 

CCI would acquire all of CCBB's shares for a net worth of $130 million, or over Tk 1,400 crore, as per the terms of the agreement, net of CCBB's anticipated net financial debt. Yesterday, this information was published on the CCI website.

Post-closing audit adjustments will be made to the equity value to ascertain the net financial debt of CCBB as of the closing date.

According to CCI International Holland BV, the transaction will be financed with current cash reserves. It will have a marginal impact on CCI's net leverage. 

CCBB representatives have verified the progress. The agreement is expected to reach its ultimate form after obtaining regulatory authorisation in Dhaka. 

As previously disclosed, the transaction was signed by CCI and its wholly-owned subsidiary CCIHBV, a subsidiary of The Coca-Cola Company. CCIHBV shall constitute the principal direct stakeholder.

CCBB will be awarded to the Istanbul-based company seven years after IBPL, Bangladesh, a subsidiary of The Coca-Cola Company,

constructed the plant in Bhaluka, Mymensingh.

Abdul Monem Ltd, a Bangladeshi-based corporation, is one of the Coca-Cola beverage bottlers. From 2019 to 2022, the non-alcoholic ready-to-drink market in Bangladesh expanded at a compound annual growth rate of 10%.

Coca-Cola, Pepsico, and local beverage manufacturers Pran, Akij, and Partex supply the Bangladeshi market. The market is valued at approximately Tk 4,000 crore and is served by two American soft drink corporations.

CCI forecasts that the non-alcoholic ready-to-drink sector in Bangladesh will experience an average annual growth rate of 12% until 2032. 

Coca-Cola brands are manufactured, distributed, and sold by CCI in eleven Muslim-majority nations, including Uzbekistan, Azerbaijan, Iraq, Jordan, Kazakhstan, Kyrgyzstan, Pakistan, Syria, Tajikistan, Turkey, and Turkmenistan.

The CEO of CCI, Karim Yahi, was pleased with his signature on the share purchase agreement under which CCBB would be acquired. He perceives this as a great occasion to enter a market exhibiting considerable prospective development, wherein value and expansion can be generated by applying CCI's foundational capabilities.

By acquiring the company, CCI enhanced its regional footprint and fortified its affiliation with The Coca-Cola Company.

As reported by CCI, the International Monetary Fund estimates that Bangladesh's gross domestic product (GDP) grew at an average annual rate of 6.5% between 2012 and 2022. From 2023 to 2028, the GDP is anticipated to expand at an average yearly rate of 6.7%.

Approximately 100 million consumers are served by CCBB in the regions of Rangpur, Rajshahi, Mymensingh, and Dhaka.

CCBB operates three primary warehouses, one bottling facility, and over three hundred employees. The business operates over 300,000 retail locations and partners with nearly 500 distributors.

Soft beverages constitute the principal revenue stream for CCBB, while the remaining products offered fall under the water category.

The company has consistently enhanced its competitive standing in Bangladesh over the past five years and, as of 2023, holds the largest market share in the soft drink industry, at 45.3%.