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'.
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