ATLANTA -- Coca-Cola Co. agreed last week to buy the bulk of its largest bottler, Coca-Cola Enterprises Inc., in a deal valued at $12.17 billion, including debt. The announcement came on the heels of PepsiCo closing its $7.8 billion purchase of its largest bottlers, Pepsi Bottling Group Inc. PBG (see story above).
Under the agreement, Coke will relinquish its 34% stake in Coca-Cola Enterprises, worth $3.4 billion, and assume $8.88 billion in debt, and all North American assets and liabilities.
CCE agreed to buy Coca-Cola's bottling operations in Norway and Sweden for $822 million, and acquire an 83% equity stake in its German bottling operations in the near future. CCE shareholders will get one share of a new Coca-Cola Enterprises company devoted to European bottling, along with a one-time $10-a-share payment.
By folding in CCE's operations, Coke will control about 90% of the bottling of its products in North America. CCE represents 16% of Coke's volume worldwide and is the primary bottler for the U.S. and Canada. Last year, the North American operations accounted for 70% of CCE's net operating revenues, with the remainder coming from Europe.
Coke expects cost savings of $350 million over four years. The transactions are expected to close in the fourth quarter.