Corporate Profile
KOF is the largest bottler of Coca-Cola trademark beverages in Latin America, and the second largest in the world, calculated in each case by sales volume in 2008. The Company operates in the following territories:
- MEXICO – a substantial portion of central Mexico (including Mexico City) and southeast Mexico (including the Gulf region).
- Central America – Guatemala (Guatemala City and surrounding areas), Nicaragua (nationwide), Costa Rica (nationwide) and Panama (nationwide).
- Colombia – most of the country.
- Venezuela – nationwide.
- Brazil – the area of greater São Paulo, Campinas, Santos, the state of Mato Grosso do Sul, part of the state of Minas Gerais and part of the state of Goiás.
- Argentina – Buenos Aires and surrounding areas.
Coca-Cola FEMSA was organized on October 30, 1991 as a sociedad anónima de capital variable (a variable capital stock corporation) under the laws of Mexico with a duration of 99 years. On December 5, 2006, in response to amendments to the Mexican Securities Law, the Company became a sociedad anónima bursátil de capital variable (a variable capital listed stock corporation). The legal name is Coca-Cola FEMSA, S.A.B. de C.V. Its principal executive offices are located at Guillermo González Camarena No. 600, Col. Centro de Ciudad Santa Fé, Delegación Álvaro Obregón, México, D.F., 012
History
Coca-Cola FEMSA is a subsidiary of FEMSA, which also owns both the second largest brewer and the largest convenience store chain in Mexico.
In 1979, a subsidiary of FEMSA acquired certain sparkling beverage bottlers that are now a part of the company. At that time, the acquired bottlers had 13 Mexican distribution centers operating 701 distribution routes, and their production capacity was 83 million physical cases. In 1991, FEMSA transferred its ownership in the bottlers to FEMSA Refrescos, S.A. de C.V., the corporate predecessor to Coca-Cola FEMSA, S.A.B. de C.V.
In June 1993, a subsidiary of The Coca-Cola Company subscribed for 30% of Coca-Cola FEMSA capital stock in the form of Series D Shares for US$ 195 million. In September 1993, FEMSA sold Series L Shares that represented 19% of the company capital stock to the public, and Coca-Cola FEMSA listed these shares on the Mexican Stock Exchange and, in the form of ADSs, on the New York Stock Exchange. In a series of transactions between 1994 and 1997, the company acquired territories in Argentina and additional territories in southern Mexico.
In May 2003, Coca-Cola FEMSA acquired Panamerican Beverages, or Panamco, and began producing and distributing Coca-Cola trademark beverages in additional territories in the central and the gulf regions of Mexico and in Central America (Guatemala, Nicaragua, Costa Rica and Panama), Colombia, Venezuela and Brazil, along with bottled water, beer and other beverages in some of these territories. As a result of the acquisition, the interest of The Coca-Cola Company in the capital stock of this company increased from 30% to 39.6%.
During August 2004, Coca-Cola FEMSA conducted a rights offering to allow existing holders of its Series L Shares and ADSs to acquire newly-issued Series L Shares in the form of Series L Shares and ADSs, respectively, at the same price per share at which FEMSA and The Coca-Cola Company subscribed in connection with the Panamco acquisition. On March 8, 2006, the Company’s shareholders approved the non-cancellation of the 98,684,857 Series L Shares (equivalent to approximately 9.87 million ADSs, or over one-third of the outstanding Series L Shares) that were not subscribed for in the rights offering which were available for issuance at a price of no less than US$ 2.216 per share or its equivalent in Mexican currency.
On November 3, 2006, FEMSA acquired, through a subsidiary, 148,000,000 of Coca-Cola FEMSA’s Series D Shares from certain subsidiaries of The Coca-Cola Company representing 9.4% of the total outstanding voting shares and 8.0% of the total outstanding equity of Coca-Cola FEMSA, at a price of US$ 2.888 per share for an aggregate amount of US$ 427.4 million. With this purchase, FEMSA increased its ownership to 53.7% of the company capital stock. Pursuant to its bylaws, the acquired shares were converted from Series D Shares to Series A Shares.
On November 8, 2007, Administración, S.A.P.I. de C.V., or Administración, a Mexican joint venture company owned directly or indirectly by Coca-Cola FEMSA and The Coca-Cola Company, acquired 100% of the shares of capital stock of Jugos del Valle. Subsequent to the initial acquisition of Jugos del Valle by Administración, Coca-Cola FEMSA and The Coca-Cola Company invited all Mexican and Brazilian Coca-Cola bottlers to participate in a joint venture in the Mexican and Brazilian business, respectively, of Jugos del Valle on the same basic terms and conditions. In Mexico and Brazil, all of the Coca-Cola bottlers agreed to participate in the corresponding sale of the shares, which was completed during 2008. The Company holds an indirect stake of approximately 20% in each of the Mexican joint venture and the Brazilian joint venture. See “Acquisitions—Jugos del Valle Acquisition.”
On May 30, 2008, Coca-Cola FEMSA entered into a purchase agreement with The Coca-Cola Company to acquire its wholly owned bottling franchise located in the state of Minas Gerais, REMIL, in Brazil, and they paid a purchase price of US$ 364.1 million in June 2008. The Company consolidate REMIL in its financial statements as of June 1, 2008.
On December 21, 2007 and on May 30, 2008, Coca-Cola FEMSA sold most of its proprietary brands to The Coca-Cola Company. The proprietary brands are now being licensed back to them by The Coca-Cola Company pursuant to its existing bottler agreements. The December 21, 2007 transaction was valued at US$ 48 million and the May 30, 2008 transaction was valued at US$ 16 million. Both of these transactions were conducted on an arm’s length basis. Revenues from the sale of proprietary brands in which Coca-Cola FEMSA has significant continuing involvement (i.e., will continue to produce and sell) are deferred and amortized against the related costs of future sales over the period of the sales arrangement.
In July 2008, Coca-Cola FEMSA acquired the Agua De Los Angeles jug water business in the valley of Mexico from Grupo Embotellador CIMSA, S.A. de C.V., one of the Coca-Cola bottling franchises in Mexico, for a purchase price of US$ 18.3 million. The brands remain with The Coca-Cola Company.
In February 2009, the Company acquired with The Coca-Cola Company the Brisa bottled water business in Colombia from Bavaria, a subsidiary of SABMiller. Coca-Cola FEMSA acquired the production assets and the distribution territory, and The Coca-Cola Company obtained the Brisa brand. Coca-Cola FEMSA and The Coca-Cola Company equally shared in paying the purchase price of US$ 92 million. The parties also agreed to an arrangement, pursuant to which Bavaria will continue to produce, sell and distribute Brisa for a transition period.
On May 8, 2009 Coca-Cola FEMSA entered into an agreement to develop jointly with The Coca-Cola Company the Crystal trademark water products in Brazil. The Company completed this transaction on May 28,2009.
As of March 31, 2009, FEMSA indirectly owned Series A Shares equal to 53.7% of Coca-Cola FEMSA’s capital stock (63% of its capital stock with full voting rights), and The Coca-Cola Company indirectly owned Series D Shares equal to 31.6% of the capital stock of the company (37% of its capital stock with full voting rights). Series L Shares with limited voting rights, which trade on the Mexican Stock Exchange and in the form of ADSs on the New York Stock Exchange, constitute the remaining 14.7% of its capital stock