Mexico’s Coca-Cola Femsa wants to partner with The Coca-Cola Company to buy a US-based entity before the end of next year.
“We are looking during this fourth quarter to have a conversation with The Coca-Cola Company to see if we agree to the basic principles of a potential acquisition in the US,” Coca-Cola Femsa’s Chief Financial Officer Hector Treviño said during a conference call to discuss Q3 results.
Treviño said the Mexican bottling company could reach a non-binding agreement with Coca-Cola in November or December and possibly close a transaction in Q3 2017.
Coca-Cola Femsa and Coca-Cola agreed in June to buy Unilver’s AdeS soy-based beverage business for $575m. The Mexican company announced in September the acquisition of the Brazilian bottler Vonpar in a cash, stock and debt transaction valued at BRL3.5bn ($1.08bn).
Treviño said the Vonpar acquisition will bring roughly $65m in earnings over the next two years, although the company does not expect sales to pick up in Brazil until Q3 2017.
Vonpar significantly undercut other bottlers in Brazil on pricing, which forced Coca-Cola Femsa to keep prices low in the surrounding region, Treviño said. But now Coca-Cola Femsa will be able to raise prices in Vonpar’s markets, he said. Vonpar has three bottling plants and five distribution centers in the southern states of Rio Grande do Sul and Santa Catarina.
Coca-Cola Femsa recorded MXN42.4bn ($2.23bn) in revenues in Q3 2016, up 12.5% on the same quarter last year. Net income rose 13.9% year-on-year to MXN2.27bn in the third quarter.
The company had MXN55.6bn in net debt at the end of Q3, up 13.8% from the same date last year.
Fitch Ratings downgraded Coca-Cola Femsa to A- from A in September, saying the company was lowering its debt levels at a slower pace than expected.