Welcome to the Real Nigerian Investment issue of M&A Daily
Coca-Cola (NYSE:KO) is expanding its business in Africa, looking to capitalize on a young and booming population. To that end, it is buying 40% of Chi, a Nigerian juice and snack maker. Coke purchased the stake from TGI Group. According to the buyer, the company,
intends to increase ownership within three years, subject to regulatory approvals while working on other long-term commercial structures.
This purchase expands Coke in Nigeria where the company already sells soda. The purchase price is around $400 million. Chi sells iced tea, fruit drinks, dairy, and snacks. The timing of this purchase is opportunistic, taking advantage of the weak Nigerian economy and currency. This is only part of Coke's plans for sub-Saharan Africa. They are looking to invest $5 billion in African bottling and water programs over the next few years.
Coke is taking the long-term view. Short term, Nigeria's prospects appear to be grim. Here is their currency in US$ and their (inverted) credit default swaps, measuring perceived confidence in avoiding default:
Abbott (NYSE:ABT) agreed to buy Alere (NYSE:ALR) in a cash deal valued at $5.8 billion. ALR holders get $56 per share in cash, a 50% premium to the prior close. The deal is accretive to earnings per share as soon as it closes. Pre-tax synergies are around a billion dollars by 2019. The combined diagnostic sales will exceed $7 billion.
Amaya (AYA) chairman and CEO David Baazov intends to make an all-cash proposal to acquire the company for around 21 Canadian dollars per share.
Under pressure from Elliott Management, CenterPoint (NYSE:CNP) is evaluating strategic alternatives for its investment in Enable Midstream Partners LP (NYSE:ENBL), including a sale or spin-off. CNP will explore converting the utility business into a REIT.
Yahoo! (YHOO) CEO Marissa Mayer is not planning on quitting. The company is expected to report decent results from parts of the core business during Tuesday's earnings report. More to come in future editions of M&A Daily…
Even in tough equity markets, deals continue to close:
- Berkshire (BRK.A/BRK.B) closed Precision Castparts (NYSE:PCP).
- comScore (NASDAQ:SCOR) completed its Rentrak (NASDAQ:RENT) buy.
- Broadcom (BRCM) closed its merger with Avago (NASDAQ:AVGO).
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Disclosure: I am/we are long YHOO, HUM.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Chris DeMuth Jr and Andrew Walker are portfolio managers at Rangeley Capital. Rangeley invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our investors, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.