Coca-Cola pays $40m for Rio

By Nick Smith

Friday 26th July 2002

Coca-Cola has swallowed local juice maker Rio Beverages for $40 million.

The joint move by The Coca-Cola Company and Coca-Cola Amatil was driven by the desire to sell "a broader beverage product" in New Zealand.

Formerly owned by the Thexton Family Trust and Cerebos Gregg's, Rio brands include Rio Gold, Keri and Thexton fruit juice drinks.

It also makes the market-leading e2 lifestyle beverage, high-profile Ikon energy drinks and Kiwi Blue mineral water.

Both Coke companies particularly wanted to connect better with Kiwi customers through a more varied portfolio of non-alcoholic, ready-to-drink beverages.

They also wanted to break into the juice, lifestyle beverage, sports and water market.

The $40 million price tag represented a "multiple of between seven and eight times forecast earnings before interest and tax for the current year ending December 31, 2002."

It included the Rio brands and remaining business assets, including bottling facilities, cold drink equipment and distribution assets.

Although the buy was still subject to Commerce Commission approval, the acquisition was also an opportunity to boost the Rio brands.

The Coca-Cola Company's Oceania managing director, Arthur Van Benthem, said: "Each of the brands has its unique position in the New Zealand market and we will be using our marketing expertise to further refine and develop them."

Coca-Cola Amatil New Zealand managing director David Westall said the purchase reflected confidence in the local market.

Rio has two bottling plants, one in Auckland and the other in Christchurch, and Mr Westall said the move would provide his company with significant additional local manufacturing capability for new non-carbonated drinks.

He said he expected to continue to manufacture at the bottling plants and achieve "cost synergies" over time.

Rio employs about 220 people.

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