Embotelladoras Arca SAB, Mexico's second-largest Coca-Cola bottler, declined today after agreeing to buy Argentine soft-drink company Grupo Guerrero.
Arca fell 15 centavos, or 0.4 percent, to 1.88 pesos in Mexico stock exchange trading at 4:10 p.m. New York time. The shares dropped as much as 5.3 percent earlier in the day, their sharpest decrease since May 2004.
The purchase of Grupo Guerrero will add 17 percent to sales by volume, Arca said, and be the first acquisition outside of Mexico, where Arca competes with larger rival Coca- Cola Femsa SAB. (KOF) Arca has increased profit for four consecutive years, and sales climbed 11 percent in 2007.
Ford estimated Arca will pay $190 million for Grupo Guerrero, which may add 0.8 percent to earnings. Alexander Robarts, an analyst with Banco Santander SA in New York, estimated Monterrey-based Arca will pay $320 million. Arca didn't disclose a purchase price.
Arca opted to purchase Grupo Guerrero after finding no Mexican bottlers that want to sell, said Carlos Beltran, director of Arca's investor relations. The transaction will likely close at the end of this year, he said.
``Arca is interested in growing, obviously first in Mexico,'' Beltran said in a telephone interview. ``But if the consolidation here isn't happening, we're going to seek opportunities abroad.''
Mexico City-based Coca-Cola Femsa, Latin America's biggest bottler, paid $3.6 billion in May 2003 for Panamerican Beverages Inc., which owned bottlers in Brazil, Venezuela, Colombia and Central America. The company announced in July it will pay $380 million for Refrigerantes Minas Gerais Ltda., a Brazilian Coke bottler known as Remil.
Arca plans to pay for Grupo Gurrero with a combination of cash and debt, Beltran said. At the end of last year, Arca had about $250 million of cash, he said.
The company has requested a shelf registration from Mexican stock exchange authorities to sell up to 6 billion pesos ($560 million) of local bonds, Beltran said. The company expects to receive authorization for the debt program this month, he said.
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