FEMSA has increased its influence on its soft drinks business Coca-Cola FEMSA, after signing a deal with the bottling arm’s other major shareholder, The Coca-Cola Co.

FEMSA will have the sole power to appoint and decide payment terms of Coca-Cola FEMSA’s chief executive officer, ending a Coca-Cola veto in this area.

But, decisions regarding mergers and acquisitions will still require the consent of Coca-Cola, said FEMSA late yesterday (10 March). FEMSA has a 53.7% share of the Latin American soft drinks bottler, while Coca-Cola has a 31.6% share. The remaining 14.7% is held by minorities.

“FEMSA runs Coca-Cola FEMSA,” said JP Morgan analyst Alan Alanis in a note today. “We don’t think there was any doubt about this, but if there was, the amendment eliminates it.”  

Alanis questioned Coca-Cola’s motive: “Coca-Cola is not precisely known for giving things for free to its bottlers. It leaves us wondering why and why now is Coke agreeing to cede its veto power on Coca-Cola FEMSA’s operating decisions.”

Coca-Cola FEMSA has recently stated its desire to pursue bottler acquisitions, both inside and outside of Latin America. Parent group FEMSA is focusing more resources on its remaining bottling and retail businesses after agreeing to sell its beer arm to Heineken.

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The group declined to comment to just-drinks yesterday following speculation that it may acquire Coca-Cola Enterprises operations in Canada.

Any move by Coca-Cola FEMSA would still require Coca-Cola’s support, under the terms of its new deal with FEMSA, which is expected to come into force after a meeting of Coca-Cola FEMSA shareholders on 14 April.

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