Coca-Cola has entered into an agreement to divest its bottling assets in China for CNY5.87 billion, which is about USD852 million.
The agreement was signed between Coca-Cola and its three main bottling groups in China: Coca-Cola Bottling Investments Group China, COFCO Coca-Cola Beverages Limited, and Swire Beverages Holdings Limited. Both Swire Pacific Limited and COFCO published transaction reports related to Coca-Cola China deal.
Under the agreement, COFCO and Swire will buy the entire bottling business owned by Coca-Cola Bottling Investments Group China. Prior to this, Coca-Cola owned about one-third of its bottling in China. With the transaction, Coca-Cola will divest all bottling businesses in China and the business will be divided by COFCO and Swire.
In February 2016, Coca-Cola announced plans to reallocate its Chinese bottling business. At that time, Coca-Cola's chairman and chief executive officer Muhtar Kent revealed that they would sell its bottling business to COFCO and Swire.
Coca-Cola is currently divesting businesses in a global scale and it sells factories, warehouses, and transportation trucks to its bottling business partners with the aim of reducing costs. Meanwhile, this move can help the company focus on concentrate puree business, which has higher profit rate and requires less capital investment.
So far, Coca-Cola has reached agreements to withdraw from over half of its bottling business and it plans to sell the remaining by the end of 2017.