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Does Coke do everything Pepsi does?

Interesting move by PepsiCo (PEP) to buy the outstanding shares it didn’t already own of its two major bottlers, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS). While the pundits debate whether it’s a smart move or sign of desperation, the market is already guessing that Pepsi arch rival Coca-Cola (KO) will follow suit. Shares of Coke’s biggest bottler, Coca-Cola Enterprises (CCE) shot up to $16 this morning after closing yesterday at $14.88. The rally faded a bit towards the close and the shares ended up around $15.27 — still a healthy 2.6% gain on a day when the market tanked by more than 4%.

But what are the odds Coke will buy CCE? We’ll probably know a lot more tomorrow after Coke releases first quarter earnings and chats with analysts. At least in their previous call, the company seemed to be moving in the exact opposite direction. Asked about capital expenditures on behalf of bottlers on a February 12 call, Chief Financial Officer Gary P. Fayard said:

“My expectation, as you saw in 2008, is over time we will be net sellers and as we actually sell bottlers, the CapEx will come down fairly significantly.”

John Ogg at the 24/7 Wall Street blog is already trying to break down a possible deal, noting that a transaction might be far more costly for Coke.

What do you think? Will Coke follow Pepsi?

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