In addition, the parties have an agreement in principle to expand CCE’s European business.
“Our ‘2020 Vision’ calls for decisive and timely action to continuously improve and evolve our global franchise system to best serve our customers and consumers everywhere,” said The Coca-Cola Company’s chairman and CEO, Muhtar Kent. “Consistent with the 2020 Vision, our roadmap for winning together, we act today as an aligned system. We’re not acquiring CCE, rather we’re acquiring their North American operations, and they remain one of our key bottling partners with world-class management, financial and operational capabilities.”
CCE’s chairman and CEO, John Brock, said: “This transformation creates significant near-term share owner value through the sale of the North American business for fair value, delivering over $4bn in cash to CCE shareowners, through cash distributions and planned share repurchases. At the same time, this enables our shareowners to retain equity in a sales and distribution company with an improved growth profile. In the future, CCE shareowners will also benefit from the expansion of our European business and our improved financial flexibility.”
The Coca-Cola Company, in a substantially cashless transaction, will acquire CCE’s entire North American business, which consists of approximately 75% of US bottler-delivered volume and almost 100% of Canadian bottler-delivered volume.
At the close of the transaction, The Coca-Cola Company will have direct control over approximately 90% of the total North America volume, including its current direct businesses.
The Coca-Cola Company’s acquisition of the assets and liabilities of CCE’s North American business includes consideration of The Coca-Cola Company’s current 34% equity ownership in CCE, valued at $3.4bn, based on a 30-day trailing average as of 24 February 2010.
In addition, consideration includes the assumption of $8.88bn of CCE debt and all of the North American assets and liabilities, including CCE’s accumulated benefit obligation for North America of $580m as of 31 December 2009, and certain other one-time costs and benefits.
In a concurrent agreement, The Coca-Cola Company and CCE have agreed in principle that CCE will buy The Coca-Cola Company’s bottling operations in Norway and Sweden for $822m, subject to the signing of definitive agreements, and that CCE will have the right to acquire The Coca-Cola Company’s 83% equity stake in its German bottling operations 18-36 months after closing for fair value.
A new entity, which will retain the name Coca-Cola Enterprises Inc, will be created through a split-off that will hold CCE’s European businesses. CCE’s public share owners will exchange each existing CCE share for a share in the new entity and will hold 100% of this new entity.
CCE will provide its share owners, excluding The Coca-Cola Company, with a special one-time cash payment of $10 per share. In connection with the transactions, CCE expects to raise initial debt financing of up to 3.0x Ebitda to pay shareowners $10 per share in cash at closing, to acquire the Norway and Sweden bottlers and to fund the expected share repurchase programme.
Following completion of the transaction, it’s expected that CCE will adopt a programme to repurchase up to approximately $1bn of shares and a policy of paying an expected annual dividend of $0.50 per share subject to the discretion of CCE’s board of directors and its consideration of various factors.
The Coca-Cola Company and CCE expect the transactions to close in the fourth quarter of 2010.
Source: The Coca-Cola Company
© FoodBev Media Ltd 2024