Swire Pacific Ltd, a conglomerate based in Hong Kong, announced on Wednesday its plans to sell its Swire Coca-Cola USA unit for USD 3.9 billion to its controlling shareholder, John Swire & Sons Ltd. Swire Coca-Cola USA is responsible for the production and sale of Coca-Cola and other beverages in 13 states across the United States. The company's territory includes parts of Arizona, California, Colorado, Idaho, Kansas, Nebraska, Nevada, New Mexico, Oregon, South Dakota, Utah, Washington and Wyoming.
Upon completion of the sale, Swire Pacific, which holds a 45% stake in Cathay Pacific Airways, Hong Kong's flagship carrier, anticipates a consolidated gain of approximately HKD 22.80 billion (USD 2.91bn) from the transaction. The company intends to utilize roughly half of the proceeds to propose a special dividend totaling HKD 11.7 billion (USD 1.5bn).
According to the agreement, which spans an initial period of 13 years, Swire Pacific's subsidiary, Swire Coca-Cola Ltd, will provide management and administrative support to the sold U.S. firm. In return, it will receive an annual fee of at least HKD117 million (USD 15m), as stated in the filing.
The divestment aligns with Swire Pacific's strategic focus on businesses in the Greater China region and Southeast Asia. It will enable the company to finance long-term investments in core divisions as well as new growth areas. Additionally, the sale will contribute to reducing net debt, strengthening the balance sheet, and enhancing financial flexibility.
In July of the previous year, Swire Pacific made a significant investment of USD 1.01 billion to acquire complete ownership of bottlers in Vietnam and Cambodia. These bottlers were previously owned by Coca-Cola (Japan), a fully owned subsidiary of Coca-Cola in the United States. This acquisition positioned Swire as the fifth-largest Coca-Cola bottler globally based on volume. Swire has been involved in bottling operations for the renowned American beverage brand since 1965 when it obtained a majority stake in the Hong Kong operation.