Deutsche Bank Maintains Hold on Coca-Cola After Aujan Industries Acquisition

Deutsche Bank published a research report on this morning on Coca0Cola KO and the company announced its acquisition of ~50% of Saudi Arabia-based Aujan Industries for $980 million. In the report, Deutsche Bank writes, "Given Pepsi's strong presence in the Middle East, especially in Saudi Arabia and Egypt, this move by Coke is clearly designed as a way to challenge Pepsi's soft drink leadership by gaining a stronger foothold in the faster growing and more fragmented juice categories in the region, noting that Pepsi has >60% CSD market share in Saudi Arabia and Coke and Pepsi combined control >90% of the CSD market in the country. More broadly speaking, we continue to believe that Coke will remain acquisitive, including the potential for a large acquisition, noting that impending bottler divestitures (most notably Germany) should provide the company with a significant cash stockpile to redeploy." Deutsche Bank maintains its Buy rating and $75 price target on Coca-Cola, which is currently trading up $0.06 from yesterday's $66.48 closing price.