Coca-Cola Enterprises Agrees to Three-Way Bottler Merger

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Bottles of Coca-Cola sit in shrink-wrapped packaging ahead of shipping

Photographer: Chris Ratcliffe/Bloomberg

Coca-Cola Enterprises Inc., an independent bottler of Coke products in Europe, agreed to a three-way merger with two other bottlers in that region to form the largest independent bottler for the famed soda brand.

The combination of CCE, Coca-Cola Iberian Partners and Germany’s Coca-Cola Erfrischungsgetränke AG will create a company spanning 13 countries with 2015 revenue of about $12.6 billion, Coca-Cola Enterprises said Thursday in a statement.

The transaction advances Coca-Cola Co.’s goal of consolidating bottling operations around the world and trimming expenses, as the deal is forecast to lead to annual cost savings of as much as $375 million after three years. Though the beverage giant is a separate business, it works closely with the bottlers, and will own a stake in the new company.

“We’ve been writing that they need to aggregate bottlers in Europe for about a year now, so we’re pleased that this has happened,” Ali Dibadj, an analyst at Sanford C. Bernstein, said. “We see significant opportunities to cut costs and drive top-line growth.”

Investors in Coca-Cola Enterprises will receive one share of the new London-based company, Coca-Cola European Partners Plc, and $14.50 in cash per share. They will own 48 percent of the resulting company. Coca-Cola Iberian Partners will have a 34 percent stake in the entity and Coca-Cola Co., which owns the German bottler, will hold 18 percent.

Stock Gains

Shares of Coca-Cola Enterprises rose 3 percent to $53.39 in New York after the transaction was announced. The stock was already up 17 percent this year before the latest gain, lifted by speculation that the deal was coming.

Coca-Cola Co. expects the transaction to “slightly” boost its comparable earnings per share next year, the Atlanta-based beverage maker said in the statement. The deal is expected to close in the second quarter of 2016.

“The creation of a larger, unified Coca-Cola bottling partner in western Europe represents an important step in our global system’s evolution,” Coca-Cola Co. Chief Executive Officer Muhtar Kent said in the statement.

CCE’s CEO, John Brock, will run the new company, with Sol Daurella, executive chairwoman of Coca-Cola Iberian Partners -- which operates in Spain and Portugal and had revenues of 3 billion euros ($3.3 billion) last year -- serving as chairwoman. Daurella’s family, through its investment arm Cobega Invest, own about 55 percent of Coca-Cola Iberian.

Bankers at Deutsche Bank AG are advising Coca-Cola Co. on the deal, with legal advice from Cleary Gottlieb Steen & Hamilton LLP and tax counsel from Skadden, Arps, Slate, Meagher & Flom LLP. Lazard Ltd. is advising Coca-Cola Enterprises and Cahill Gordon & Reindel LLP and Slaughter and May served as legal counsel.

Credit Suisse Group AG advised the franchise relationship committee of Coca-Cola Enterprises’ board and Clay Long Esq. and Baker Hostetler LLP served as legal counsel to the committee. Rothschild advised Coca-Cola Iberian Partners and Allen & Overy LLP and Uria Menendez provided legal advice.

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