Coke to acquire C.C.E. North American operations

by Keith Nunes
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ATLANTA – The Coca-Cola Co. and its bottler Coca-Cola Enterprises have agreed to strategically align their operations with Coca-Cola acquiring the North American operations of C.C.E. In turn, the C.C.E. plans to acquire Coca-Cola’s bottling operations in Norway and Sweden, and will have the right to acquire Coca-Cola’s German bottling operations in 18 to 36 months.

Coca-Cola called its acquisition of C.C.E.’s North American operations “substantially cashless,” but it includes consideration of Coca-Cola’s 34% equity ownership of C.C.E. which is valued at $3.4 billion, the assumption of $8.88 billion of C.C.E. debt and all of the North American assets and liabilities, including C.C.E.’s accumulated benefit obligation for North America of $580 million as of Dec. 31, 2009, as well as certain one-time costs and benefits.

The C.C.E. will pay $822 million for Coca-Cola’s bottling operations in Sweden and Norway.

“Our North American business structure has remained essentially the same since C.C.E. was founded in 1986, while the market and industry have changed dramatically,” said Muhtar Kent, chairman and chief executive officer of The Coca-Cola Co. “With this transaction, we are converting passive capital into active capital, giving us direct control over our investment in North America to accelerate growth and drive long-term profitability. We will work closely with our bottling partners to create an evolved franchise system for the unique needs of the North American market.

“Additionally, we will reconfigure our manufacturing, supply chain and logistics operations to achieve cost reductions over time. Importantly, the creation of a unified operating system will strategically position us to better market and distribute North America’s most preferred nonalcoholic beverage brands. At the same time, in Europe, we are further strengthening our franchise system to provide broader, contiguous geographic coverage and optimizing our marketing and distribution leadership.”

John Brock, chairman and c.e.o. of C.C.E. added that “C.C.E. remains the preeminent Western European bottler and a key strategic partner with The Coca-Cola Company. Our European business serves an attractive market with growing volumes and profit driven by rising per capita consumption. As such, C.C.E. will have an improved profile with enhanced revenue, margins and e.p.s. growth prospects. Together with The Coca-Cola Company, we will continue to improve the effectiveness of our operations in our expanded presence in Europe. These actions strengthen our ability to compete effectively and sustainably in Europe and represent the beginning of an exciting new era of long-term growth for C.C.E.’s business and shareowners.”

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