Coca-Cola plan to buy bottler echoes PepsiCo
Source: Agencies |
February 26, 2010, Friday
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Print Edition
Print Edition
Coca-Cola Inc plans to acquire the North American operations of its largest bottler in a move that mirrors similar deals by its main rival PepsiCo to gain more control of manufacturing and distribution.
The deal calls for Coca-Cola to give up its 34 percent stake in Coca-Cola Enterprises Inc, worth US$3.4 billion, and assume US$8.88 billion in debt.
Separately, Coca-Cola will sell its Norwegian and Swedish bottling operations to Coca-Cola Enterprises for US$822 million. Coca-Cola Enterprises also gets an option to buy Coca-Cola's 83 percent stake in its German bottling operations.
Coca-Cola Enterprises shareholders will get one share of a new Coca-Cola Enterprises company focused only on European bottling and will get a one-time US$10 per-share payment. The company plans to issue debt to finance this payment and the European acquisition.
The deals are expected to close in the fourth quarter this year. Coca-Cola said it has halted share buybacks so far this fiscal year as a result of the deal and doesn't plan to buy back any more shares until the deal closes.
Following the deal, Coca-Cola will control about 90 percent of the bottling of its products in North America.
Coca-Cola said it expects cost savings of US$350 million over four years and that the acquisition will add to earnings per share by 2012.
PepsiCo announced in August last year it would buy its two biggest bottlers for US$7.8 billion. Those deals are expected to close soon.
The deal calls for Coca-Cola to give up its 34 percent stake in Coca-Cola Enterprises Inc, worth US$3.4 billion, and assume US$8.88 billion in debt.
Separately, Coca-Cola will sell its Norwegian and Swedish bottling operations to Coca-Cola Enterprises for US$822 million. Coca-Cola Enterprises also gets an option to buy Coca-Cola's 83 percent stake in its German bottling operations.
Coca-Cola Enterprises shareholders will get one share of a new Coca-Cola Enterprises company focused only on European bottling and will get a one-time US$10 per-share payment. The company plans to issue debt to finance this payment and the European acquisition.
The deals are expected to close in the fourth quarter this year. Coca-Cola said it has halted share buybacks so far this fiscal year as a result of the deal and doesn't plan to buy back any more shares until the deal closes.
Following the deal, Coca-Cola will control about 90 percent of the bottling of its products in North America.
Coca-Cola said it expects cost savings of US$350 million over four years and that the acquisition will add to earnings per share by 2012.
PepsiCo announced in August last year it would buy its two biggest bottlers for US$7.8 billion. Those deals are expected to close soon.
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