Instant Analysis: The Coca-Cola Co to Acquire Soy Beverage Maker for $575 Million

By Markets Fool.com

What happened?

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Coca-Cola has traveled far south of our borders for its latest acquisition. In conjunction with an affiliate, Mexican bottler Coca-Cola FEMSA , the beverage giant reached an agreement with global consumer goods giant Unilever to buy the latter's AdeS -- a maker of soy-based drinks headquartered in Argentina. The price of the purchase is roughly $575 million.

Source: AdeS

Besides its native Argentina, AdeS distributes its drinks to Brazil, Mexico, Uruguay, Paraguay, Bolivia, Chile, and Colombia.

The acquisition has been approved by the boards of directors of Coca-Cola, Coca-Cola FEMSA, and Unilever. It is subject to review by the relevant regulatory bodies.

Does it matter?

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The deal makes sense for all parties involved. Unilever is itching to exit the comestibles business in favor of higher-margin consumer goods categories, while Coca-Cola needs to (sorry) juice its growth, and Coca-Cola FEMSA is the logical partner for the deal. Although a niche product, AdeS has a good presence in its region, posting sales of around $284 million in 2015.

For Unilever, the divestment is the latest in a series of brand sell-offs. The company has recently unloaded such well-known brands as Slim-Fast diet drinks and Ragu pasta sauce. The company's shares rose slightly after the deal was announced.

The stock price of Coca-Coca was largely unaffected, likely because an asset the size of AdeS is a drop in the bucket of a company with 20 brands that bring in more than $1 billion in annual sales apiece.

That said, AdeS should compliment its brand lineup nicely in a region that has great potential for growth. And for Unilever, the deal is another step toward its goal of divesting away from food and beverage products.

The article Instant Analysis: The Coca-Cola Co to Acquire Soy Beverage Maker for $575 Million originally appeared on Fool.com.

Eric Volkman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Coca-Cola, and recommends Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.