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Mexico's Coca-Cola Femsa ditches plans to buy U.S. operations
May 16, 2017 / 1:34 PM / 6 months ago

Mexico's Coca-Cola Femsa ditches plans to buy U.S. operations

MEXICO CITY (Reuters) - Mexico’s Coca-Cola Femsa (KOFL.MX), the world’s largest Coke bottler, said on Tuesday it has abandoned plans to acquire certain territories in the United States after thorough analysis and negotiations with The Coca Cola Company (KO.N).

FILE PHOTO: A man walks next to corporate logos of Coca-Cola and Femsa at a distribution center of the company in Caracas, Venezuela May 24, 2016. REUTERS/Carlos Garcia Rawlins

Coca-Cola Femsa, a joint venture between Coca-Cola Co and Mexican bottler and retailer Fomento Economico Mexicano (Femsa), said it would continue evaluating acquisitions of other available territories operated by Coca-Cola’s Bottling Investments Group.

Last July, KOF said it was ready to jump on “the next wave of inorganic growth through an agreement to evaluate, preferentially, the acquisition of certain territories within the Bottling Investments Group,” including U.S. operations.

Femsa executives said in February, however, that the company would carefully watch the exchange rate and policies that U.S. President Donald Trump could adopt including his plan to update or scrap the North American Free Trade Agreement.

In a client note on Tuesday, Santander said KOF has been evaluating a move into California since the second half of 2016 which it described as a “risk,” given taxes on sugary beverages in certain counties and rising labor costs.

KOF’s decision not to enter the American market “will have a positive impact on the share price, since it shows management is willing to make hard decisions if they don’t add value for shareholders,” Santander said.

Coca-Cola Femsa shares were trading up 1.64 percent at 148 pesos per share in mid-day trading.

Mexican direct investment in the United States totaled $16.6 billion in 2015 according to U.S. government data.

Reporting by Veronica Gomez Sparrowe; Editing by Nick Zieminski and Grant McCool

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