Coca-Cola Expands to the Middle East
It's hard to imagine a place on earth not overrun with Coca-Cola (NYS: KO) vending machines, but apparently there is: The Middle East is one of the few final frontiers for Coke, where they're preparing to conquer its beverage market.
Bloomberg reports Coca-Cola "agreed to acquire about half of the equity in the beverage business of Saudi Arabia-based Aujan Industries in what the companies described as a $980 million transaction."
In doing so, Coca-Cola will acquire 50% of the Aujan entity that holds the rights to the Rani and Barbican brands and 49% of Aujan's bottling and distribution unit. The transaction is expected to close in the first half of 2012.
According to Reuters, the deal would be the largest-ever investment by a multinational company in the Middle East's consumer goods sector.
But not all of the Middle East will be graced with Coca-Cola's sugary sweet concoction -- the deal excludes Aujan's Iranian manufacturing and distribution business.
Middle East beverage market
"The Middle East is a high-growth region with some of the highest rates of non-alcoholic ready-to-drink per-capita consumption," Ahmet C. Bozer, Coca-Cola's group president for Eurasia and Africa, said in the statement (via Bloomberg).
Coca-Cola's products will be closely tied with Aujan's other products in order to promote quick growth and popularity in the region.
The move to join forces with Aujan, one of the biggest companies in Saudi Arabia, is seen as a bid to catch up with arch-rival PepsiCo (PEP), which already has a sizable stake in the Middle Eastern market.
Interested in following the trends of the beverage industry? To help you along we list below the ten largest soft drink companies trading on the U.S. stock exchange.
Do you think any of these names are threatened by KO's expansion into the Middle East?
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
1. The Coca-Cola Company: Distributes, and markets nonalcoholic beverages worldwide. Market cap of $150.99B. The stock has gained 7.04% over the last year.
2. Pepsico (NYS: PEP) : Engages in the manufacture, marketing, and sale of foods, snacks, and carbonated and non-carbonated beverages worldwide. Market cap of $100.50B. The stock has gained 1.09% over the last year.
3. Coca-Cola FEMSA (NYS: KOF) : Produces, markets, and distributes Coca-Cola trademark beverages and brands. Market cap of $16.08B.
4. Hansen Natural (NAS: HANS) : Engages in the development, marketing, sale, and distribution of beverages in the United States and internationally. Market cap of $8.25B. The stock has gained 85.54% over the last year.
5. Dr Pepper Snapple Group (NYS: DPS) : Engages in the manufacture and distribution of non-alcoholic beverages in the United States, Canada, and Mexico. Market cap of $8.07B. The stock has gained 4.09% over the last year.
6. Coca-Cola Enterprises (NYS: CCE) : Produces, distributes, and markets non-alcoholic beverages in Europe. Market cap of $7.84B. The stock has lost 0.51% over the last year.
7. Coca-Cola Hellenic Bottling Company (NYS: CCH) : Engages in the production, sale, and distribution of alcohol-free beverages primarily in Europe. Market cap of $5.55B. The stock has performed poorly over the last month, losing 15.89%.
8. National Beverage (NAS: FIZZ) : Develops, manufactures, markets, and distributes beverage products in the United States. Market cap of $762.07M. The stock is a short squeeze candidate, with a short float at 5.11% (equivalent to 14.38 days of average volume). The stock has gained 22.36% over the last year.
9. SodaStream International (NAS: SODA) : Engages in the development, manufacture, and marketing of home beverage carbonation systems and related products. Market cap of $664.40M. The stock has gained 9.76% over the last year.
10. Cott (NYS: COT) : Engages in the production and distribution of retailer brand beverages in North America and internationally. Market cap of $593.44M. This is a risky stock that is significantly more volatile than the overall market (beta = 2.31). The stock has lost 23.41% over the last year.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
List compiled by Alexander Crawford. Kapitall's Rebecca Lipman and Alexander Crawford do not own any of the shares mentioned above. Data sourced from Finviz.
At the time this article was published The Motley Fool owns shares of Coca-Cola and PepsiCo. Motley Fool newsletter services have recommended buying shares of Coca-Cola, SodaStream International, Coca-Cola Hellenic Bottling, PepsiCo, and Hansen Natural. Motley Fool newsletter services have recommended creating a diagonal call position in PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.