Coca-Cola Announces Plans To Sell Holdings In South Africa
ATLANTA (AP) _ The Coca-Cola Co. announced Wednesday it will sell its holdings in South Africa in protest of that country’s policy of racial separation.
A canning company employing about 445 people will be sold, a concentrate- prod ucing company employing about 20 people will be moved out of South Africa, and holdings in a beverage company will be sold, a company spokesman said.
The soft drink company plans to sell at least part of the holdings to black South African investors. Coke products still will be sold in South Africa.
″We saw this move as one of the many weapons that can be effective against apartheid,″ Coca-Cola spokesman Randy Donaldson said. ″We have chosen this route as a way that will allow the formation of a multi-racial canning system.″
Donaldson said the Atlanta-based company made the final decison to pull out because it was dissatisfied with progress toward abolishing apartheid.
Final plans for the pullout will not be completed for another six to nine months, but Donaldson said the overall plan involves selling off all interests in bottling and canning plants in the racially torn country.
″Once completed, the Coca-Cola Co. will not own any holdings in South Africa,″ Donaldson said.
The decision to divest came after a long period of discussion, Donaldson said. Donald R. Keough, Coca-Cola’s president and chief operating officer, said in a statement Wednesday that the company had been reducing its investments in South Africa since 1976.
Donaldson said he could not estimate how much money is involved.
Coca-Cola owns 55 percent of the canning company, which it will sell, said Coca-Cola spokesman Carlton Curtis said.
A concentrate-manufacturing operation that employs about 20 people will be moved out of South Africa, he said. Syrup will be shipped into the country.
Coca-Cola, which sold a 25-percent holding in Amalgamated Beverage Industries this spring, will sell the remaining 30 percent interest it holds in the company, said Curtis.
Before this spring’s sale of ABI holdings, Coca-Cola had majority ownership in South African bottling and canning plants that employed 4,288 people, said Alison Cooper, an analyst with the Investment Responsibility Research Center, a Washington-based research group.
Cooper said the latest financial figures for Coca-Cola’s investment in South Africa are from 1983. In that year, Coca-Cola’s assets in South Africa totaled $60 million, which was 2.9 percent of the company’s total assets, said Cooper.
The company’s sales in South Africa that year totaled $260 million, which was 5 percent of Coca-Cola’s total worldwide sales, said Cooper.
The Southern Christian Leadership Conference announced in August that it would call for a boycott of Coca-Cola and other American companies if they had not divested by Jan. 15, 1987, the birthday of slain civil rights leader the Rev. Martin Luther King Jr.
″Our labor has not been in vain,″ said the Rev. Joseph Lowery, president of the SCLC. ″I think they’re making a strong moral statement and sound and sensitive business judgment.″
Lowery said he had been meeting with Coca-Cola officials for some time, asking the company to take the lead in divestment.
″We felt akin to them, since they’re based in Atlanta,″ Lowery said. ″Coke has always had a moral conscience. ... I hope it will be a flagship to other institutions.″
But Donaldson said the decision to pull out was completely internal, not affected by pressure from the SCLC or hopes of leading other companies to the same action.
″I don’t think it would be fair to say we felt any pressure,″ he said. ″It was an internal decision. We did what was the right move for Coke.″
Donaldson said it would be impossible to asess the financial impact the pullout would have on the company until it is determined exactly how it will be achieved.
Hugh Zurkuhlen, a beverage industry analyst for Salomon Brothers, Inc., said it should have very little financial impact on the soft drink giant.
″Coke products will still be sold in South Africa,″ he said. ″They’re only selling the bottling and canning operations. They may see no financial difference at all.″
He estimated that Coke earns $50 million to $60 million annually in South Africa, before taxes.
Earlier this year, Coke created two foundations in South Africa, called the Equal Opportunity Funds, and committed $10 million to their support. They are administered by an independent, multi-racial board of trustees in South Africa.
The Investment Responsibility Research Center says American companies are pulling out of South Africa at an increasing pace.
Among the companies that have pulled out in recent years are General Electric Co.; VF Corp., an international apparel company that makes Lee Riders bluejeans; and Pepsico Inc., Coke’s largest competitor. Pepsi prodcucts are still sold in South Africa, Zurkuhlen said.
The research center says seven American companies left South Africa in 1984, 39 in 1985 and 14 had left by June of this year.
Among the American companies that still have significant operations in South Africa are International Business Machines Corp., General Motors Corp., Goodyear Tire & Rubber Co., Mobil Corp. and RJR Nabisco Inc.