Swire Pacific to sell Swire Coca-Cola, USA for HK 30.4bn

Hong Kong-based conglomerate Swire Pacific has announced plans to sell its Swire Coca-Cola, USA unit for a total consideration of HK 30.4 billion (approx. $3.88 billion).

The sale of Swire Coca-Cola, USA to JS&S (Beverages), a unit of John Swire & Sons, Swire Pacific’s parent firm, is conditional on the approval of Swire Pacific’s independent shareholders.

Upon completion, Swire Pacific will use around half of the proceeds to propose payment of a special dividend in aggregate of HK 11.7 billion (approx. $1.493 billion), according to a statement issued to the Hong Kong stock exchange yesterday. This would be distributed to shareholders via a dividend of HK 8.120 (approx. $1.04) per A share and HK 1.624 (approx. $0.21) per B share, which “would be larger than the sum of dividends paid over the last three financial years,” according to the filing.

Swire Coca-Cola, USA produces and sells Coca-Cola and other drinks in 13 states across Western US including Arizona, California, Kansas and Washington, with a franchise population of approximately 30 million.

The Coca-Cola Company has authorised Swire Coca-Cola, USA to retain all of its rights under its existing bottling agreements after the change in ownership.

In a statement, Swire Pacific said that the sale is “consistent with its strategic focus on Greater China and South East Asia,” and will help it to “fund long-term investments with strong growth potential in its core divisions as well as new growth areas”.

It continued: “The transaction provides [Swire] with significant net proceeds, which will materially reduce [Swire’s] net debt, further strengthen its balance sheet, and enhance its financial flexibility”.

Guy Bradley, chairman of Swire Pacific, said: “This transaction represents an attractive valuation that results in a gain of approximately HK $22.8 billion (approx. $2.91 billion) on disposal, the biggest profit ever realised by Swire Pacific. This allows us to provide immediate value to our shareholders by returning approximately half of this gain by way of a special dividend. It is also consistent with our strategic focus on Greater China and South East Asia, where we remain committed to executing our exciting investment pipeline.”