US: Coca-Cola to help LG in CCA Korea purchase - report

By just-drinks.com editorial team | 25 July 2007

The Coca-Cola Co. is set to join LG Household & Health Care in its move to acquire Coca-Cola Amatil's South Korean bottling arm, according to local reports.

Speaking to Reuters today (25 July), a source familiar to the deal said the drinks giant will take a 10% stake in Coca-Cola Korea Bottling Corp, with LG retaining the remaining 90%. LG Household was confirmed as the preferred bidder for the Korean bottling unit by CCA earlier this month. LG came out on top in the race for CCA's Korean unit, beating a rival bid from SPC Group.

No-one was immediately available for comment at Coca-Cola when contacted by just-drinks today.

In February, CCA said that it was considering selling its bottling business in the country after its operations there hit group earnings during 2006. Total operating profit last year at CCA fell by 5.5% to A$539.4m (US$423.5m). Earnings were hit by a product recall in South Korea as well as high sugar, plastic and aluminium costs across the business. Surprisingly, earnings in South Korea rose in 2006, although the figures were boosted by a number of asset sales.

While CCA initially hoped to recoup in the region of US$619m from the sale, the two companies have said they are discussing a deal worth between $520m and $545m including the assumption of debt.

Sectors: Soft drinks, Water

Companies: CCA, Coca-Cola Co