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Coca-Cola Femsa Falls on Morgan Stanley Trade: Mexico City Mover

July 11, 2012

Coca-Cola Femsa Falls on Morgan Stanley Trade

Bottles of Coca-Cola soda move down a conveyor at the Coca-Cola Femsa SAB bottling facility in Toluca, Mexico. Source: Coca-Cola Femsa via Bloomberg

Coca-Cola Femsa SAB (KOFL), Latin America’s largest bottler of the soft drink, plunged the most in three years after executives at companies the soda maker bought out last year sold a portion of their stakes.

The shares fell 8.2 percent to 163.32 pesos at the close of trading, the biggest decline since February 2009.

The surge in selling volume reflects moves by some former owners of bottlers acquired by the company in 2011 to trim their stakes, said Jose Castro, head of investor relations at Coca- Cola Femsa. Coca-Cola Femsa agreed to acquire three Mexican Coke bottlers in 2011, paying for them with shares.

“What we are seeing today is certain family members monetizing the shares,” Castro said in a telephone interview from Mexico City.

During the first minute of trading, Morgan Stanley executed a trade for 2.25 million shares at 166.93 pesos, 6.2 percent below yesterday’s close. Daily trading volume increased to 5.4 million shares, almost seven times the three-month average.

Pen Pendleton, a spokesman for Morgan Stanley, declined to comment.

Investors selling multi-million share blocks of thinly- traded stocks should expect to receive a below-market rate, said Carlos Ponce, an analyst with Grupo Financiero Ve Por Mas SA. Coca-Cola Femsa’s volume yesterday was less than 1 percent of America Movil SAB, Mexico’s most-traded stock.

Share Rally

The bottler’s stock rallied 34 percent this year through yesterday, probably making the sellers more willing to accept a lower price, according to Ponce.

“With the accumulated profit, they probably decided they were willing to do it with this discount,” Ponce said. “It’s a company that was looking a bit pricey.”

The shares climbed on July 4 to a five-year high of 13.7 times trailing earnings before interest, taxes, depreciation and amortization.

To contact the reporters on this story: Brendan Case in Mexico City at bcase4@bloomberg.net; Jonathan J. Levin in Mexico City at jlevin20@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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