Showing posts with label CEO steve cahillanesoft drink industry. Show all posts
Showing posts with label CEO steve cahillanesoft drink industry. Show all posts

Monday, October 4, 2010

Coca-Cola Company Closes Bottler Buyout

NEW YORK (AP) - Coca-Cola Co. has completed its $3.4 billion buyout of the North American operations of its largest bottler, part of the company's plans to control more of its distribution to better react to changing customer tastes.

The world's largest soft drink maker on Sunday closed the deal for the domestic unit of Coca-Cola Enterprises Inc. Including about $8.8 billion in assumed debt, the transaction is valued at nearly $12.3 billion. In exchange, the bottler will buy certain foreign bottling operations from Coca-Cola, and its shareholders get stock in a new company and $10 per share.

The bottler's shareholders approved the deal on Friday. Earlier in the week regulators approved the sale with certain conditions, namely that Coca-Cola restrict its access to business information from rival Dr Pepper Snapple Group Inc. Some of Dr Pepper's drinks are bottled by Coca-Cola Enterprises under a deal made when it was an independent bottler.

Coca-Cola will operate the acquired businesses under the names Coca-Cola Refreshments USA Inc. and Coca-Cola Refreshments Canada Co. The subsidiaries will be led by Coca-Cola Refreshments President and CEO Steve Cahillane, former president of Coca-Cola Enterprises' North American business unit.

Coca-Cola announced the deal in February, just after PepsiCo Inc. made a similar move. Both Coca-Cola and the bottler are based in Atlanta.

The move is part of a soft drink industry trend to gain more control over distribution. Soft drink makers make concentrate and then sell it to bottlers, who make and distribute the products.

By owning bottlers, the companies can better control where their products go and how they are displayed. They are also able to get products to market more quickly. Coca-Cola expects $350 million in cost savings as a result of the deal.

The U.S. soft drink market has been hurting for several years as people switch to juices and teas for health reasons. Shoppers have also spurned soft drinks in the down economy as a way to save money.

Coca-Cola CEO Muhtar Kent said shoppers will notice a more varied stable of products on shelves at different prices, as the company can now control what is distributed where and at what price points. Sales of drinks like Coke are improving enough now in North America that changes that come with the deal will lead to more sustainable growth, he said. Growth wouldn't come, he said, if the brands were hurting.

"A new structure can never be a replica or make up for bad brands," he said.

The new Coca-Cola Enterprises is expected to start trading Monday on the New York Stock Exchange under the existing ticker "CCE."

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