Coca-Cola closes USD 12.3 billion bottler buyout
The reason for the deal is that Coke seeks to gain more control over distribution. Also, it expects USD 350 million in cost savings as a result of the deal.
The good news for Atlanta is the headquarters for the new, albeit shrunk CCE is staying put.
The bad news is that once CCE completes the transaction CCE will go from 70,000 employees to 13,000 employees. And CCE’s workforce in Atlanta will go from 3,500 employees to about 100.
The other 3,400 employees will join Coke.
What is more, CCE will go from being the world’s largest Coca-Cola bottler to becoming the world’s third-largest independent bottler of Coca-Cola products.
“The new CCE will be an entirely western European business,” said John Brock, the CEO of CCE. “The new CCE, our European business, is a very attractive business with strong market shares, high profit margins and lower consumption rates. The opportunity for growth is huge.”
So why will CCE remain headquartered in Atlanta? The simple answer is taxes — capital gains taxes. The tax bill would be in the billions of dollars if headquarters were moved.
The deal between Coca-Cola and CCE is multifaceted. CCE will continue running its operations in Great Britain, Holland, France, Belgium, Luxembourg and Monaco. On the same day that the North American transaction took place, CCE acquired Coca-Cola’s bottling operations in Sweden and Norway.
Mr Brock even hinted at making acquisitions in other parts of the world.
He commented that the financial prospects for the new CCE are much stronger than for the current company, which has annual revenue growth of between 4 percent and 5 percent. After the transaction, growth should be between 8 percent and 9 percent.
The new CCE will have between USD 7 billion and USD 8 billion in sales.
Under the agreement, 18 to 36 months after the original deal is completed, the new CCE also will have an option to acquire Coca-Cola’s 83 percent equity stake in its bottling operations in Germany.
Although Germany would add to the size of the new CCE, Mr Brock could not be drawn on whether CCE will exercise that option. Germany has 11,000 employees (just slightly fewer than CCE’s workforce) and 24 plants, but it sells only about 300 million cases of product a year.
With Germany, the new CCE would have about USD 10 billion in sales and sell about 900 million cases a year.
What is known is that the decision to buy the German bottling operations will be made by executives in Atlanta.
