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Arca Continental to serve as Coca-Cola's sole franchise bottler in Southwest US

Published 09 February 2017

Mexican beverage firm Arca Continental has agreed to act as the Coca-Cola Company's sole franchise bottler in Southwest US.

The deal will cover states such as Texas, parts of Oklahoma, New Mexico and Arkansas, including nine production facilities.

To carry out the deal, Arca Continental will contribute the shares of its beverage business operating in Mexico, Argentina, Peru and Ecuador to its subsidiary AC Bebidas.

Apart from this, Coca-Cola Refreshments USA (CCR), will also contribute 100% of the equity of Coca-Cola Southwest Beverages.

Coca-Cola Southwest Beverages has the exclusive rights to bottle, distribute and sell within the southwest region of US, where there is an estimated annual sales of about $2.35bn.

As a result, Arca Continental will gain 80% equity stake in AC Bebidas and Coca-Cola Refreshments USA will hold the remaining 20%. The value of CCR’s stake in bottling subsidiary is $2.7bn and is subject to closing adjustments.

The agreement is subject to customary closing conditions including corporate and regulatory approvals from Mexico’s antitrust authority, The Comision Federal de Competencia Economica and Arca’s shareholders. The transaction is expected to close in the second quarter of 2017.

Arca Continental board chairman Manuel Barragán Morales said: "This historic integration reaffirms the work and mutual trust we have strengthened for more than 90 years with The Coca-Cola Company and we will develop important competitive advantages for the benefit of customers, consumers, employees, the community and our shareholders."

Arca Continental CEO Francisco Garza Egloff said: "This landmark agreement further expands our geographic diversification and significantly strengthens our commitment to profitable growth and generation of shared value in all territories where we operate."