Coca-Cola Company (KO) closed the acquisition of the North American operations of Coca-Cola Enterprises Inc. (CCE) for a total consideration of $12.3 billion.
In February 2010, Coca-Cola Company entered into a deal with Coca-Cola Enterprises Inc. to buy the latter’s North American bottling business. Coca-Cola Enterprises, in its turn, also agreed to acquire Coca-Cola Co.’s bottling operations in Norway and Sweden for $822 million.
The North American bottling business would operate as a part of the Coca-Cola Refreshments unit, which also includes a company-owned bottler in Philadelphia and Coke’s fountain and juice businesses. Coke expects the deal to result in savings of at least $350 million over the next four years.
Coca-Cola Enterprises is the only licensed bottler of Coca-Cola in many Western European countries, including Belgium, France and Britain. Coca-Cola Enterprises will retain its name and run as a new public company consisting of its existing European territories along with the bottling operations in Norway and Sweden acquired from the current transaction. The shares will commence trading on the New York Stock Exchange under the CCE stock symbol.
The consolidation of the North American bottling business would create a broader platform, thus enabling Coca-Cola to more productively deliver its brands and boost profitability, auguring well for shareholders at the end. Beverage is a highly competitive industry. The company should abide by the changing consumer needs and preferences and should be more innovative to compete within the industry.
Coca-Cola’s shares maintain a Zacks #2 Rank, which translates into a short-term ‘Buy’ recommendation. Our long-term recommendation for the stock remains ‘Neutral’.
COCA-COLA ENTRP (CCE): Free Stock Analysis Report
COCA COLA CO (KO): Free Stock Analysis Report
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