Coca-Cola HBC Bolsters African Presence with CCBA Acquisition

Coca-Cola HBC is making a bold move to expand its presence in African markets by acquiring Coca-Cola Beverages Africa (CCBA). The deal promises faster growth, with analyst firm Berenberg predicting a 1.5% lift in earnings per share (EPS) immediately after the acquisition.

Berenberg believes that folding CCBA into Coca-Cola HBC will give it a stronger route-to-market and create a platform for potential bolt-on deals in the future. The numbers look promising on paper, with Berenberg expecting a 5.4% return on invested capital (ROIC), but there's room for debate.

While some might focus on the EPS accretion, markets care more about the quality of those earnings. A company can show higher EPS while still investing fresh capital at average returns. Berenberg's price target is 54.83 pounds sterling, which only slightly increased from 54.53 pounds after raising its 2027 and 2028 forecasts.

The real test will be whether the ROIC climbs meaningfully above the 5.4% starting point. Higher, sustained returns typically justify a higher valuation multiple and give management more room to consolidate further; weaker returns tend to make the earnings uplift look less dependable.