Politic-Economic-Society-Tech

Cola wars fizz in Philippines

By Alex Frew McMillan in Hong Kong

The cola wars are fizzing in the Philippines. 

Pepsi has stepped into a bidding duel with Coke for the country's No. 2 soft-drinks company, Cosmos Bottling Corp. 

Pepsi is coming from behind in the race for Cosmos to stop Coke and its partner, San Miguel, from getting a stranglehold on soda sales. 

Food maker RFM Corp. is looking to unload its stake in Cosmos and says it will settle the sale this week. 

"We are expecting the offers from the two parties who have indicated strong interest anytime within the week," RFM Vice President Ramon Lopez told CNN. 

As soon as the final bids come in, RFM will sign an exclusivity deal with the winner and final due diligence can be wrapped up, he added. 

Brewer and food processor San Miguel Corp. was the first company to declare interest. It said last week that it is in talks to take Cosmos off RFM's hands. 

It has teamed up with the Coca-Cola Co., the Atlanta.-based maker of Coke, on the bid. That would be their second big soft-drinks deal. 

San Miguel, which accounts for around 7 percent of the Philippines national output, recently teamed up with Coca-Cola Co. to buy 70 percent of Coca-Coca Bottlers Philippines Inc. from Australia's Coca-Cola Amatil for $1.1 billion. 

A soft-drinks monopoly
Nailing down Cosmos would give San Miguel and Coke something close to a soft-drinks monopoly in the Philippines. 

Coca-Coca Bottlers has 60-65 percent of the country's soft-drinks market. Cosmos controls 20-25 percent with its Pop cola, which has been gaining popularity. 

It would also effectively shut out PepsiCo, the maker of Pepsi, which now has a share of around 10 percent. 

So PepsiCo has teamed with U.S. investment shop The Carlyle Group to counter San Miguel and Coke's offer. 

San Miguel reportedly offered around $225 million (12 billion pesos), which RFM said was too low. The Financial Times says PepsiCo has countered with a $270 million offer (14 billion pesos). 

The recent strong performance of Cosmos attracted interest from other bidders, Lopez said, sometimes for part of RFM's 83.2 percent stake. 

But the Pepsi-Carlyle and Coke-San Miguel bids are for the whole stake and have been the most serious. 

"If you're offered a compelling price, it's something you have to consider," Lopez said. 


source: cnn.com, 17 July 2001