By Macharia Kamau
Three Coca-Cola bottling companies have announced plans to enter into a three-way reorganisation of ownership that will formally combine the shareholding and governance of all three companies into one entity.
The three bottlers attributed the move to a need to deal with challenges faced by individual bottlers including rising cost of doing business that has slowed expansion and reduced profit margins.
It is likely to see a number senior and middle-level managers at the three bottlers lose their jobs with the shift from three separate entities into a single holding company that will have a single board and management team.
The proposal is subject to shareholder and regulatory approval.
The bottlers downplayed what seems like a merger of the three entities that until now have largely different shareholders and managed independently. “The ownership reorganisation, a normal practice in the corporate world when shareholders seek to better capture opportunities,” said a joint statement by the three bottlers.
The statement added that the move is aimed at eliminating challenges that individual bottlers face including limited ability to invest in new production capacity and stunted growth.
The new structure is also expected to ease pressure on margins for individual bottlers that have experienced increase cost of inputs, exchange rate risk and competition.
“The move will build on the existing high quality and best practices at each of the bottlers to develop a strong platform for growth in the non-alcoholic ready-to-drink beverages market in Kenya,” said the statement.
Production and operations will continue at each plant as normal.
The three bottlers have been in operation since the 1970s, under bottling agreements with The Coca-Cola Company during which period each has experienced significant growth.
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