Coke beats Pepsi in Philippines fizz war

Coke and its partner, San Miguel, will claim close to 90 percent of the Philippines soft-drinks market

By CNN's Alex Frew McMillan

MANILA, Philippines (CNN) -- Coke has beaten Pepsi in a deal that wraps up the Philippines soft-drinks market.

The Coca-Cola Co. and its partner, San Miguel Corp., have won a bidding war for the Philippines No. 2 soda maker, Cosmos Bottling Co.

Manila-based food maker RFM Corp. is selling its 83.2 percent stake in Cosmos Bottling Co.

San Miguel and Georgia-based Coke put in the first bid, around $225 million (12 billion pesos).

But New York-based PepsiCo countered with a $270 million offer (14 billion pesos).

RFM now says San Miguel and Coke have the winning offer, through their Coca-Cola Bottlers Philippines (CCB) joint venture.

"We are favorably considering the offer submitted by San Miguel and CCB," Ramon Lopez, RFM vice president, told CNN.

Price pegged at $273 million

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The price and details are still being worked out. But a memorandum of understanding will likely be signed next week, Lopez said.

Local reports suggest Coke and San Miguel have upped their price to $273 million (14.5 billion pesos). The deal will likely be the biggest so far this year in the Philippines.

Winning Cosmos gives Coke and San Miguel close to 90 percent of the Philippines soft-drink market.

Second big deal

San Miguel and Coke recently paired up to buy a majority stake of Coca-Cola Bottlers Philippines Inc, the local Coke bottler, from Australia's Coca-Coal Amatil for $1.1 billion.

San Miguel holds 65 percent of the Philippine bottler, with Coke holding the rest.

Coca-Cola Bottlers Philippines has 60-65 percent of the country's soft-drink sales. Cosmos, with its Pop Cola brand growing in popularity, claims 20-25 percent.

PepsiCo is left with 10 percent of the country's soda sales.

After the sale, RFM is reportedly targeting a profit of $6.6 million (350 million pesos) in 2001, after losing 520 million pesos last year.

Cash-strapped RFM will now concentrate on its dairy, flour and meats businesses. Cosmos accounted for 40 percent of its sales and 50 percent of profits.