Coca-Cola HBC Acquires Majority Stake in Coca-Cola Beverages Africa in $2.6 Billion Deal

CCBA financials (ex-Ghana)	2022	2023	2024
Volume (m unit cases)	1,012	1,065	1,102
Net sales revenue (US$ m)	3,292	3,424	3,632
EBIT (US$ m)	(131)	177	267
EBIT margin	(4.0)%	5.2%	7.3%
EBITDA (US$ m)	472	433	465
Profit before tax (US$ m)	(178)	88	116
Total assets (US$ m)	5,384	5,051	5,030
Net debt (US$ m, at 31 Dec 2024)	1,063

Trends are encouraging: three-year volume CAGR of 4.5% and currency-neutral revenue CAGR of 12.6%. Note the 2022 EBIT loss reflected impairment linked to hyperinflation adjustments in Ethiopia.

Governance changes and the path to 100%

Coca-Cola HBC and TCCC will enter new shareholder arrangements at completion. For Coca-Cola HBC, a Strategy Committee will provide “Enhanced Oversight” on key matters such as major M&A, significant capex and the CEO appointment. This gives TCCC’s nominated director and Kar-Tess Holding (subject to shareholding thresholds) formal influence – not control – over big strategic decisions.

For CCBA, Coca-Cola HBC will nominate up to four directors and TCCC will nominate one, assuming TCCC retains at least 7%. There is a clear route to full ownership via options: Coca-Cola HBC has a call option between three and five years post-completion, and TCCC has a put option between three and a half and six years. The option price is based on the purchase price per share plus an escalating coupon.

Financing, leverage and dilution: what to expect

• Leverage: expected around the top of 1.5-2.0x Net debt/EBITDA post-completion, with no expected change to the investment grade profile.
• Dilution: issuance/transfer of 21,027,676 shares to GFI equals 5.47% of the enlarged share capital.
• Capital returns: the existing share buyback is cancelled with immediate effect.
• Listing: a secondary listing on the Johannesburg Stock Exchange is planned at or around completion.

In simple terms, Coca-Cola HBC is using a mix of debt and equity to fund growth. The dilution and buyback cancellation are the price of admission to a bigger, faster-growing platform. The EPS accretion target suggests management expects the earnings uplift to offset the dilution in time.

Approvals, timeline and related party aspects

Shareholder approvals are required to amend the articles to permit the issuance/transfer of consideration shares, among other governance changes. Kar-Tess Holding and TCCC have given irrevocable undertakings to vote in favour, covering 163,607,750 shares – about 45.0% of voting rights at the announcement date.

Regulatory clearances are needed in South Africa, Botswana, COMESA, Mozambique, Namibia and Tanzania. The deal is a significant transaction under UK Listing Rules and a related party transaction, as TCCC is a substantial shareholder. UBS, as sponsor, considers the terms fair and reasonable to security holders.

Risks to watch: execution, South Africa skew and fixed-price timing

• Regulatory timing: completion is targeted by end-2026. Delays or remedies could push the timeline or reduce benefits.
• Integration: aligning two large emerging-market bottlers is complex. Retaining talent, harmonising systems and route-to-market will be critical to deliver the EPS accretion.
• South Africa concentration: 60% of CCBA volumes are in South Africa – helpful for scale, but creates exposure to one market.
• Fixed consideration: the consideration is largely fixed at signing; if CCBA underperforms before completion, value leakage could occur.
• Leverage and refinancing: bridge facilities must be refinanced; higher-for-longer rates would raise the cost of capital.
• Change-of-control clauses: some CCBA facilities contain change-of-control provisions, potentially triggering refinancings on less favourable terms.
• Dilution and governance: 5.47% equity issuance to GFI and new governance mechanics may feel less flexible than today, even if they do not confer control.

My take: a bold, sensible bet on Africa’s long-term beverage growth

This is a strategically coherent deal. Coca-Cola HBC knows Africa well from Nigeria and its recent integration in Egypt, and CCBA adds scale in exactly the right categories and markets. The pro forma size, diversification and the option to go to 100% ownership are strong positives.

The trade-offs are clear: dilution now, buyback off, a long road to completion and the usual emerging-market bumps. The EPS accretion guide, leverage comfort and JSE listing signal confidence. If management executes and macro conditions are supportive, this should enhance Coca-Cola HBC’s growth and resilience over the medium term.

In short, higher quality, higher growth, and more Africa – with homework to do on approvals, integration and financing. For long-term investors, that is a compelling upgrade path.