The business has suffered from falling sales and operating profits in recent years and Coca-Cola is looking to take a majority stake to bring the decline under control.

In a statement to the Philippines stock exchange, San Miguel said the discussions "include negotiations over the Coca-Cola Company taking at least a majority stake in, and management and operational control, of CCBPI".

San Miguel has significantly expanded its operations across Asia in the last two years, with an ambitious acquisition spree seeing it take control of Australia's National Foods for A$1.9 billion.

But during this time, sales at Coca-Cola Bottlers have been falling - they declined 7 per cent last year to P39.8 billion while operating profit shrunk by 63 per cent to P1.2 billion. Sales also fell in 2004 and 2003.

The performance at the unit triggered rumours that Coca-Cola would not renew the company's licence when a five-year deal expired last month. Under the deal, San Miguel pays royalties to Coca-Cola and also buys its soft-drink concentrates from the US company, which in turn funds advertising and marketing of the product.

But although the sales volume of CCBPI and its affiliates make up 18 per cent of San Miguel's revenue, an analyst told the Financial Times that the bottler is considered a drag on San Miguel.

"San Miguel may be able to report better sales growth if CCBPI were taken off its consolidated balance sheets," Leo Venezuela, an analyst at ATR Kim Eng Securities, told the paper.