Thursday, Dec 15, 2011

(This story was originally published Wednesday)

--Coca-Cola buying about half of Middle East beverage company Aujan

--$980 million deal gives Coca-Cola greater presence in market where it trails PepsiCo

--Saudi Arabia-based Aujan has about $850 million in annual sales 


 
   By Ellen Knickmeyer and Paul Ziobro 
   Of DOW JONES NEWSWIRES

RIYADH (Zawya Dow Jones)--Coca-Cola Co. (KO) is buying roughly half of Aujan Industries Co., a big player in the Middle Eastern beverage market, for $980 million, giving Coca-Cola a greater presence in one of the few regions it trails PepsiCo Inc. (PEP) in market share.

Saudi Arabia-based Aujan has about $850 million in annual sales with drinks like the juice brand Rani and the flavored malt beverage Barbican. It also makes Vimto, a fruity drink popular during Muslim Ramadan celebrations, under a licensing agreement that will remain unchanged.

The deal gives Coca-Cola a way to make a bigger splash in the growing Middle Eastern consumer goods market, and potentially make some headway in one of the geographic areas dominated by its chief rival PepsiCo. Though Coca-Cola dominates globally, PepsiCo has a commanding lead across the region. In Saudi Arabia, PepsiCo controls 85% of the soda market, compared with 12% for Coca-Cola. Pepsi's advantage is also commanding in Kuwait, Lebanon and other countries.

"This deal begins to give Coke a bigger presence in some of those markets," Beverage Digest publisher John Sicher said.

PepsiCo is continuing to push in these markets. In 2009, PepsiCo launched a joint venture with Saudi Arabia's Almari, a leading dairy company in the Middle East.

Aujan is one of the three largest sellers of still beverages in each country it operates, including the United Arab Emirates, Oman, Bahrain, Qatar, Jordan and Yemen. It also exports product to other markets in Africa, Europe and Asia.

Under the deal, billed as the largest-ever investment by a multination firm in the Middle East's consumer goods business, Coca-Cola will buy 50% of the entity that owns Aujan's brands, and a 49% stake in the bottling and distribution company that licenses Vimto. The parties expect the deal to close in the first half of next year.

The deal excludes Aujan's manufacturing and distribution businesses in Iran.

Aujan hopes that the deal will open up international growth opportunities for its own brands, as well as boost the prospects for Vimto.

"This partnership will allow us to unlock new and substantial opportunities," Aujan chairman Sheikh Adel Aujan said in a statement.

The investment comes as Coca-Cola plans to invest $5 billion in the Middle East and North Africa region over the next decade where it tries to capitalize on growth opportunities in emerging markets.

Coca-Cola shares rose 0.2% in recent trading to $66.33. They are up less than 1% this year.

-By Ellen Knickmeyer and Paul Ziobro, Dow Jones Newswires; 971-55-109-3359; ellen.knickmeyer@dowjones.com

(END) Dow Jones Newswires

15-12-11 0338GMT