Mexico-based Coca-Cola products bottler Coca-Cola FEMSA's unit Spal Industria Brasileira de Bebidas has reached an agreement to acquire the Brazilian Coca-Cola system bottler Vonpar.

The deal involves an aggregate enterprise value of R$3.5bn ($1bn) and an approximate equity value of R$3.5bn ($1bn), which is subject to customary adjustments and approvals.

In the last year, Vonpar generated R$2bn ($500m) in net revenues and earnings before interest, taxation, depreciation and amortisation (EBITDA) of R$335m ($97m), through sales of 190 million unit cases of beverages and 23 million unit cases of beer.

"We are excited to continue consolidating our leadership position in Brazil."

In the next 18 to 24 months, synergies of around R$65m ($18m) at the EBITDA level are expected from this transaction.  

Vonpar currently operates three bottling units and five distribution centres, and employs approximately 4,000 people.

This acquisition will allow Coca-Cola FEMSA to serve around 43% of the Brazilian population and 54% of its gross domestic product (GDP).

It is estimated that the transaction will increase Vonpor's volume by 25%, which would enable it to reach 49% of the Coca-Cola system’s volume in Brazil.

Spal will pay around R$1.7bn ($504m) in cash during the closing.

Spal will pay R$688m ($200m) in cash at closing, which in a subsequent and separate transaction will be capitalised by the sellers into a recently incorporated Mexican company, which will be merged into Coca-Cola FEMSA in return for approximately 27.9 million newly issued KOF series L shares. The Coca-Cola Company is yet to approve this transaction.

Coca-Cola FEMSA chief executive officer John Santa Maria said: "We are excited to continue consolidating our leadership position in Brazil.

"We are confident that Vonpar’s talented group of professionals, and their track record of performance, coupled with their social and environmental commitment, will positively impact our combined operations going forward.

"The form of payment of this transaction underscores the flexible approach we take to mergers and acquisitions and will ensure our company will continue to enjoy the financial flexibility to capture the next wave of growth in our industry and continue investing in our organic growth.”