Arca Continental SAB de CV (PK) (USOTC:EMBVF)
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From Jun 2019 to Jun 2024

Mexican Coca-Cola bottlers Embotelladoras Arca SAB (ARCA.MX) and Grupo Continental SAB (CONTAL.MX), or Contal, said Monday that they have agreed to merge their operations under a new company, Arca Continental.

In filings with the Mexican stock exchange, the companies said that Arca will issue 468.8 million shares to acquire Contal at a ratio of 0.625 Arca shares for each Contal share, and that the ratio was agreed as a merger of equals. That would place the deal at about $2.3 billion, based on Arca's closing price Monday of 59.06 pesos ($4.90) a share. Contal shares closed at MXN37.00.

The companies said the merger, which is expected to close in the second quarter, still requires shareholder and regulatory approvals. They said Arca shares will continue to trade on the Mexican stock market under a different ticker.

The merged company will have estimated annual sales volume above 1.2 billion unit cases, making it the second-largest Coca-Cola bottler in Latin America behind Coca-Cola Femsa SAB (KOF, KOF.MX).

Arca said that prior to the merger, it will pay dividends of MXN1.40 per share. After the merger, it will propose to holders of Arca Continental shares the payment of extraordinary dividends of either 0.341 share for each share held, or MXN13.60 in cash. Most of the controlling shareholders have agreed to receive shares.

"Arca and Contal believe this merger will strengthen their leading position in the beverage market by leveraging their brand portfolio and generating numerous opportunities to better serve their customers and consumers," the companies said, adding that they expect the merger to generate "significant synergies."

Arca quoted its chairman Manuel L. Barragan as saying the integration of the two companies "strengthens our position as one of the leading beverage companies in the region."

"We appreciate the support and confidence of The Coca-Cola Company and reiterate our commitment to jointly preserve the leadership of its products and brands throughout our markets," he added.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5980-5176, anthony.harrup@dowjones.com