(Reuters) -Hong Kong-based conglomerate Swire Pacific (OTC:SWRAY) Ltd said on Wednesday it would sell its Swire Coca-Cola (NYSE:KO) USA unit for $3.9 billion to its controlling shareholder, John Swire & Sons Ltd.
Swire Coca-Cola USA produces and sells Coca-Cola and other drinks across 13 U.S. states.
Swire Pacific, which owns a 45% stake in Hong Kong's flagship carrier Cathay Pacific Airways (OTC:CPCAY), expects a consolidated gain of about HK$22.80 billion ($2.91 billion) from the deal, it said.
Once the sale goes through, it will use about half the proceeds to propose payment of a special dividend in aggregate of HK$11.7 billion, it added.
The sale is in line with Swire Pacific's focus on businesses in the Greater China area and Southeastern Asia, it said in a filing, and will help it fund long-term investments in both core divisions and new growth areas.
The deal will also help it cut net debt, shore up its balance sheet and strengthen financial flexibility, it said.
In an agreement with an initial 13-year term, Swire Pacific unit Swire Coca-Cola Ltd will provide management and administrative support to the sold U.S. firm and receive an annual fee of at least HK$117 million, the filing showed.
($1 = 7.8323 Hong Kong dollars)