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Coca-Cola set to exercise 100% option to buy Chi Limited


Atlanta headquartered beverage giant Coca-Cola Plc. has concluded plans to exercise its 100 percent option of acquiring Chi Nigeria Limited, makers of the Chivita line of products, sources familiar with the matter tell BusinessDay.
Value of the complete acquisition is still unknown but in 2016, Coca Cola made initial equity investment of 40 per cent in the company estimated to be in the range of $300 m to $400 million. Analysts in 2016 put the value of Chi at about $1 billion.
After the acquisition of 40 percent equity, Cola-Cola had last two years indicated plans to increase ownership to 100 percent within three years, subject to regulatory approvals, while working on other long-term commercial structures. Chi, makers Hollandia yoghurt, is the market leader in juices and value added dairy and its product portfolio includes iced teas and snacks.
“We are still on track to complete the acquisition (of Chi Ltd) by the end of the first quarter of 2019,” Peter Njonjo, president of Coca-Cola’s West Africa business, had said.
The planned full acquisition, when actualised, will enable Coca-Cola to reclaim leadership of the Nigerian juice market which it lost to Chi Ltd a couple of years ago and also build a strong capability to expand its West African portfolio of still beverages.  The investment is aimed at consolidating Coca-Cola’s leadership of the Nigerian beverage market.

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Juice sales form a central plank of the U.S. Company’s attempt to offer drinks at a range of prince points in Nigeria to improve affordability in a country where inflation has been a major concern, even for the monetary policy authorities.
According to sources, the parent company of the Lagos-based Chi Ltd, Tropical General Investments (TGI) Group which is owned by a European family, had been considering sale of the company for some time. Apart from Chi, TGI has interests in Agri business involving seed multiplication, fertilizer distribution, cotton, cocoa and vegetable oil milling as well as health care with Chi Pharmaceutical which owns a World Health Organisation (WHO) approved plant. TGI is also into oil and gas, industrial chemicals manufacturing and real estate development. And it is currently building a seasoning cube facility in Shagamu, Ogun state.
The acquisition, according to sources is part of global strategy by Coca Cola, the US Company to diversify from its core business.
The Coca-Cola Company, whose flagship brand (Coca-Cola) is the world’s most recognised brand with a brand value of about $79.96 billion, is the largest player in the Nigerian beverage industry and its brands are present in almost every home.
It is not clear whether Coca Cola will rename Chi Ltd after the full acquisition or allow it to operate under the Chi brand name.
Nigeria with estimated population of about 190 million (comprising about 90 million youth population), high urbanisation and a growing middle class is a huge market that is hard to ignore, particularly for fast moving consumer goods companies.