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Fitch: KOF's Ratings Unaffected by Acquisition Announcement of Companhia Fluminense

Monday, July 1, 2013 3:24 PM


Fitch: KOF's Ratings Unaffected by Acquisition Announcement of Companhia Fluminense

It is Fitch Ratings's opinion that Coca-Cola Femsa, S.A.B. de C.V.'s (KOF) ratings are unaffected following the announcement of a definitive agreement to acquire 100% of the shares of Companhia Fluminense de Refrigerantes, S.A. (Companhia Fluminense). The enterprise value of the transaction is USD448 million and will be fully financed with KOF's available cash balance. The acquisition is subject to customary closing conditions and approvals.

Fitch beleives that this acquisition will not have a material impact on KOF's financial position and operational profile. On a pro forma basis, considering an annual EBITDA contribution from Companhia Fluminense of around USD40 million, KOF's total debt to EBITDA and net debt to EBITDA would be around 1.2x and 0.9x, respectively. In addition, the acquisition fits with KOF's growth strategy in territories that are contiguous to its existing geographic footprint. Expected synergies of USD14 million in the following 18 to 24 months are estimated as a result of this transaction.

Companhia Fluminense's territories cover parts of the states of Minas Gerais, Rio de Janeiro and Sao Paulo and operate 1 bottling plant and 4 distribution centers. During the last 12 months as of March 2013, the company sold 56.6 million unit cases of beverages, including beer, and generated revenues of around USD232 million.

KOF's ratings are supported by the company's substantial free cash flow generation, solid financial position, ample financial flexibility and strong business profile. The ratings also reflect the company's strategic relationship with The Coca-Cola Company (KO, rated 'A+' with a Stable Outlook by Fitch) and the explicit and implicit financial support KOF has received from KO. In addition, the ratings consider the geographical diversification of the EBITDA generated outside Mexico, as well as its strong credit profile.

Fitch currently rates KOF as follows:

--Foreign Currency Issuer Default Rating (IDR) 'A';

--Local Currency IDR 'A';

--National Scale Long-term rating 'AAA(mex)';

--National Scale Short-term rating 'F1+(mex)';

--Senior notes for USD500 million 'A'.

--Certificados Bursatiles issuance KOF 13 'AAA(mex)'.

The Rating Outlook is Stable.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

(Source: Business Wire )
(Source: Quotemedia)

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