What buying fourteen countries at once can teach accountants about goodwill
2 Min Read
On 14 September the Competition Tribunal conditionally cleared Coca-Cola HBC to buy 75% of Coca-Cola Beverages Africa. Ten years after CCBA started trading as its own company, the business that makes and sells Coke in South Africa is changing hands again.
The headline number is $2.6 billion for the acquisition.
This comprises fourteen African territories Coca-Cola HBC gets to operate in the day the deal closes. It gets the bottling agreements, the plants, roughly 800,000 customer outlets, the supplier contracts, the local labour agreements and the regulatory standing that comes with having been there for years. None of it has to be built from the ground up.
That's the case for expansion by acquisition in one paragraph.
You're not buying a business so much as buying a decade of setup you'd otherwise have to do yourself, and the accounting question is what happens when you try to put that decade on a balance sheet.
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🧠 Fun fact: In 1899, two Chattanooga lawyers bought the US bottling rights to Coca-Cola for one dollar. The story goes that Asa Candler never bothered collecting it, because he didn't think the bottling side was worth much. Coca-Cola HBC is paying $2.6 billion for the African version of the same idea.
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The Main Story
What you're actually buying
Building a beverage operation in a new country is mostly about getting a manufacturing licence, finding a cold chain that works when the power doesn't, signing up informal traders who deal in cash, registering for VAT and excise in a jurisdiction whose rules you've never read, and convincing a regulator you intend to stay. Multiply that by fourteen and you've got a project that runs for years and might still fail in half of them.
CCBA already covers South Africa, Kenya, Ethiopia, Uganda, Mozambique, Tanzania, Zambia, Malawi, Namibia, Botswana, Eswatini, Lesotho, Comoros and Mayotte. On 2024 numbers it turned over roughly €3.36 billion at an EBIT margin of about 7.3%, on 1.1 billion unit cases. Bolted on, the combined group does around 4 billion unit cases and roughly €14.1 billion of pro forma revenue, making it the second-largest Coca-Cola bottler in the world.
There's a push factor too → At 31 December 2025 Coca-Cola HBC held about €850 million of cash in Russia that it can't freely repatriate. A company with that much of its balance sheet stuck behind a sanctions regime has an obvious reason to want growth somewhere else.
Where the acquisition shortcut lands on the balance sheet
Almost everything that made the shortcut worth taking, the market position, the distribution reach, the fact that CCBA already knows how to sell a 500ml bottle in Addis Ababa, fails the recognition criteria on its own. You can't capitalise institutional knowledge, and we know how IFRS feels about recognising customer relationships as an intangible asset… not too fond.
So in a merger/acquisition it goes to goodwill. Goodwill under IFRS 3.32 is a residual: what you paid, plus the non-controlling interest, less the fair value of the identifiable net asset.
Everything attractive about the acquisition that can't be separately identified ends up in that number.
Goodwill is essentially the price of not having to do the work yourself, sitting in one line and waiting to be impairment-tested every year under IAS 36.
However some of it does get pulled out.
IFRS 3.B31 requires intangibles to be recognised apart from goodwill where they're separable or arise from contractual or legal rights, so the bottling agreements and the customer relationships should come out of the residual with their own useful lives. Expect a purchase price allocation that takes most of the twelve-month measurement period in IFRS 3.45 to finalise.
Two features of this particular deal most worth watching:
The consideration isn't all cash → The Gutsche family is being paid in Coca-Cola HBC shares, ending up with roughly 5.47% of the enlarged company, while The Coca-Cola Company takes cash funded off a €1.4 billion bridge facility that's since been termed out with bonds. Under IFRS 3.37 equity issued as consideration is measured at fair value at the acquisition date, not at signing. The deal was announced in October 2025 and closes in the second half of 2026, so the purchase price, and therefore the goodwill, moves with Coca-Cola HBC's share price for the whole of that gap.
The 25% that isn't being bought yet → The Coca-Cola Company keeps a quarter of CCBA, with an option arrangement letting Coca-Cola HBC take it out within six years of closing. Whether that 25% shows up as non-controlling interest or as a liability depends entirely on how the option is written. A call option on its own leaves the NCI where it is. A written put, where Coca-Cola HBC can be forced to buy, drags IAS 32.23 into play and creates a financial liability at the present value of the redemption amount on day one, even though the shares aren't owned and the put might never be exercised.
And there's about €41.8 million, call it R800 million, of transaction costs. IFRS 3.53 sends acquisition-related costs straight to profit or loss (advisors, lawyers, competition counsel, etc.) The one exception is the cost of issuing the debt and the shares, which follows IFRS 9 and IAS 32 instead.
Insights From The Pocket CA
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Here’s the technical detail in this scenario from the number-crunching machine:
IFRS 3 Business Combinations
Acquisition date is the date the acquirer obtains control, not the date of signing (IFRS 3.8, IFRS 3.9).
Identifiable assets acquired and liabilities assumed are measured at acquisition-date fair value (IFRS 3.18).
NCI is a per-transaction policy choice: full fair value, or the proportionate share of identifiable net assets (IFRS 3.19). The choice changes the goodwill number.
Goodwill is the residual after consideration plus NCI plus any previously held interest, less identifiable net assets (IFRS 3.32).
Consideration transferred, including equity instruments issued, is measured at fair value on the acquisition date (IFRS 3.37).
Acquisition-related costs are expensed as incurred, with debt and equity issue costs following IFRS 9 and IAS 32 (IFRS 3.53).
Contingent liabilities assumed are recognised at fair value where there's a present obligation, even if an outflow isn't probable (IFRS 3.23). Wider than IAS 37, and it exists precisely because acquirers kept inheriting problems.
IFRS 10 Consolidated Financial Statements
Control needs power, exposure to variable returns, and the ability to use that power to affect them (IFRS 10.7).
Potential voting rights, options included, only count where they're substantive (IFRS 10.B22 to B25, IFRS 10.B47).
Buying the remaining 25% later is a transaction with owners acting as owners. It goes to equity and creates no new goodwill (IFRS 10.23, IFRS 10.B96).
IAS 21 The Effects of Changes in Foreign Exchange Rates
Each of those fourteen operations has its own functional currency (IAS 21.9 to 21.14), translated at closing rate for assets and liabilities and transaction-date rates for income, with the difference to OCI (IAS 21.39).
Goodwill and fair value adjustments on a foreign operation are treated as assets of that operation, so they're retranslated at every reporting date (IAS 21.47). Group goodwill on CCBA will move with the rand and the birr whether or not the business does anything.
The cumulative translation reserve only hits profit or loss on disposal (IAS 21.48).
IAS 32 Financial Instruments: Presentation
A contract obliging an entity to buy its own equity instruments for cash creates a financial liability at the present value of the redemption amount, even where the obligation is conditional on the holder exercising a put (IAS 32.23).
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The Bottom Line
Acquisition as a market entry strategy works because it speeds up the hard and boring parts of business in a foreign region (starting and compliance).
The licences, the routes to market, the supplier relationships and the years of showing a regulator you're serious are all things you can buy in an afternoon and It's the whole reason goodwill exists as a category.
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The Journal Entry Team
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