Coca-Cola Acquires Stake in Nigerian Beverage Maker
Coca-Cola has taken a 40 percent stake in Chi Ltd., a Nigerian maker of snacks and dairy and juice drinks, as part of a concerted campaign to expand in Africa.
The agreement will allow Coca-Cola to increase its ownership of Chi Ltd. to 100 percent within three years, subject to regulatory approvals.
Though financial specifics of the deal were not released, more than one industry analyst has Coca-Cola paying a triple-digit-million-dollar amount for the stake in Chi, which, last year, was valued at as much as $1 billion.
According to a joint statement, the Atlanta, Georgia-headquartered global soft drink giant and Chi’s parent, Tropical General Investments Group (TGI), “have agreed to jointly discuss and explore other opportunities in the region to further develop this relationship.”
European-owned TGI had reportedly been considering a sale of Chi Ltd. for some time. The Lagos-based company produces and distributes fruit drinks, iced teas, snacks and dairy products throughout Nigeria.
The deal is reportedly part of Coca-Cola Co.’s plans to boost investment in Africa to $17 billion between 2010 and 2020, a figure roughly three times as much as the company’s investment in the continent in the previous decade.
Two years ago, Coke said it would invest $5 billion with African bottling partners in new manufacturing lines and equipment, as well as safe water access programs, over six years. In the first nine months of fiscal 2015, Coca-Cola derived 5.5 percent of its $34.3 billion net revenue from its Eurasian and African operations.
At the end of 2014, Coca-Cola, SABMiller, and South Africa-based Gutsche Family Investments agreed to meld the bottling operations of their non-alcoholic beverage businesses in Southern and East Africa.
When operational, the combined operation, Coca-Cola Beverages Africa, will serve 12 high-growth countries to account for 40 percent of all Coca-Cola beverage sales on the continent.