The Coca Cola Company (KO) intends to buy the North American operations of its biggest bottler, Coca Cola Enterprises (CCE). Although the exact value of the deal is not yet finalized, the transaction is expected to be valued at approximately $15 million, including debt.
This move by Coca Cola follows a similar deal signed by its biggest rival PepsiCo (PEP), who aims to close the acquisition of its two biggest bottlers, Pepsi Bottling Group Inc. (PBG) and Pepsi Americas Inc. this week. This deal was announced in August 2009.
Once the deal is finalized, Coca Cola would buy the North American operations of Coca Cola Enterprises and some of the assets in Scandinavia and Germany. However, the operations of the rest of the bottling company will remain the same. The North American operations represent the major part of Coca Cola Enterprises’ business, contributing about 70% of the net operating revenue in 2009, according to the Wall Street Journal.
This move by both the companies is believed to be a response to falling soft-drink sales. Over the past one year or so, the beverage industry, especially in North America, is witnessing declining carbonated beverage sales. This has prompted the companies to increase control over the costs and the distribution system.
On February 18, 2010, Coca Cola raised its quarterly dividend by 7.3% to 44 cents. Recently, Coca Cola reported fourth-quarter results with a 5.4% increase in revenues and 5% growth in worldwide unit case volume.
Read the full analyst report on “KO”
Read the full analyst report on “CCE”
Read the full analyst report on “PEP”
Read the full analyst report on “PBG”
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