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Coca-Cola to retain majority stake in African bottling unit

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Coca-Cola to retain majority stake in African bottling unit

Coca-Cola Co. said May 20 that it will retain its controlling stake in its bottling business unit Coca-Cola Beverages Africa Ltd. "for the foreseeable future."

As a result of the decision, CCBA's financial results will be reclassified under Coca-Cola's continuing operations, beginning in the second quarter of 2019. This is a shift from CCBA being accounted for as a discontinued operation since 2017 when Coca-Cola gained control of the business.

The beverage giant does not expect the change to affect its organic revenue and comparable EPS growth outlook for the full year. However, it anticipates a $400 million increase in its 2019 guidance for cash from operations and another $400 million increase in capital expenditures.

President and COO Brian Smith said the company is committed to its initial plan of refranchising CCBA but added that "it is in the best interests of all involved for Coca-Cola to continue to hold and operate [the bottler]."

CCBA was established in 2016 through the combination of the African nonalcoholic ready-to-drink bottling interests of SABMiller PLC, Coca-Cola and Gutsche Family Investments, according to the release. Anheuser-Busch InBev SA later acquired SABMiller and reached an agreement to transition AB InBev's 54.5% stake in CCBA to Coca-Cola. This 2017 transaction made Coca-Cola the controlling shareholder of CCBA.