Coke takes $980m stake in Saudi’s Aujan

one of the largest investments by a multi-national firm into the Gulf’s consumer goods sector

Coca-Cola has taken a $980m stake in Saudi drinks giant Aujan Industries, in what amounts to one of the largest investments by a multi-national firm into the Gulf’s consumer goods sector.

The deal will see Coca-Cola become a 50 percent shareholder in the company that owns the rights to Aujan’s brands, and a 49 percent shareholder in Aujan’s bottling and distribution operation.

The deal excludes Aujan’s Iranian interests.

Chairman Adel Aujan and his executive board will remain at the helm of the company, with no management changes or staff layoffs expected.

“This is a game-changer for us, for Coca-Cola and for the drinks industry,” Adel Aujan told Arabian Business. “Coca-Cola is effectively becoming a minority shareholder in our company with an overall stake of just under 50 percent.”

“This gives us a major financial advantage against our competitors, especially when it comes to economies of scale. We buy 100,000 tonnes of oranges a year – they buy 100 million tones. You can work out very quickly what a huge leap this gives us when it comes to procurement.” The company plans to rebrand within the next six months to reflect the new ownership structure. The transaction is expected to close in the first half of 2012.

Aujan Industries is one of the GCC’s largest independent drinks companies, with more than 2,500 employees and sales in 70 countries. Turnover this year is expected to top $850m.

Aujan said the company had been considering a tie-up with Coca-Cola for several years, following a series of informal approaches.

 “We actually started talking to Coca-Cola some time back. I felt five years ago that if we didn’t align ourselves with a company like them, we would always be at a disadvantage when it comes to capacity. Our brands are already very successful but we simply haven’t had the capacity to produce more drinks,” he said.

Aujan had considered an IPO to raise capital but that was now “off the table”, he added.

 “This changes everything, and a huge part of the money from Coca-Cola will be used to build at least two new factories,” he said. “It’s a very big leap. This is a Saudi company becoming part of a huge global group. I’m very happy with this agreement.” Coca-Cola is the top-selling soft drink brand in the United States, and the Atlanta-based company is the world’s largest soft drink maker.