Hong Kong’s Swire Pacific has announced plans to sell its Swire Coca-Cola, USA unit to JS&S (Beverages), for some HKD 30.4 billion (USD 3.88 billion).
The acquisition by JS&S, a unit of John Swire & Sons, Swire Pacific’s parent firm, is conditional on the approval of Swire Pacific’s independent shareholders, according to a regulatory filing
If approved, Swire Pacific will use around half of the proceeds to propose payment of a special dividend in aggregate of HKD 11.7 billion. This would be distributed to shareholders via a dividend of HKD 8.12 per A share and HKD 1.62 per B share, “representing approximately 50 percent of the gain on disposal, which would be larger than the sum of the dividends paid over the last three financial years,” according to the filing.
Swire Pacific said the significant net proceeds from the transaction will serve to materially reduce the company’s net debt, further strengthen its balance sheet and enhance its financial flexibility.
“This transaction represents an attractive valuation that results in a gain of approximately HKD 22.8 billion on disposal, the biggest profit ever realised by Swire Pacific,” said Guy Bradley, chairman of Swire Pacific.
“This allows us to provide immediate value to our shareholders by returning approximately half of this gain by way of a special dividend. It is also consistent with our strategic focus on Greater China and Southeast Asia, where we remain committed to executing our exciting investment pipeline.”
Swire Coca-Cola, USA produces and sells Coca-Cola and other drinks in 13 states across Western US including Arizona, California, Kansas and Washington, with a franchise population of approximately 30 million.
Founded some 150 year ago, Swire Pacific is a Hong Kong-based conglomerate focused on Greater China and Southeast Asia, with core businesses in property, beverages, and aviation, as well as new areas of growth such as healthcare and sustainable foods.