The three European bottlers of Coca-Cola, Coca-Cola Enterprises, Inc., Coca-Cola Iberian Partners SA, and Coca-Cola Erfrischungsgetränke AG, has agreed to merge to form the largest Independent Coca-Cola Bottler in terms of net revenue, according to a press release issued by Coca-Cola Enterprises.
The merged company, which will be called Coca-Cola European Partners Plc, will position itself to capture growth.
Coca-Cola European Partners will have access to a population of over 300 million people across Western Europe, according to the press release.
The combined company will serve 13 countries, including Wester Europe's four largest markets for ready-to-drink, non-alcoholic beverages, Germany, Spain, Great Britain and France.
Coca-Cola European Partners will also have access to each of the three companies' best practices, which includes market knowledge, company operations, and product development, according to the press release.
These access provide Coca-Cola European Partners with the ability to combine the best and effective practices to improve its service to customers and have a strategy to further enhance the combined company's growth.
"The creation of a larger, unified Coca-Cola bottling partner in Western Europe represents an important step in our global system's evolution," Muhtar Kent, chairman and CEO of The Coca-Cola Company, said in the press release. "We continue to adapt our business model to innovate, invest and grow along with the changing demands of the marketplace,"
Kent also added that Coca-Cola European Partners will be better positioned to serve its customers and drive profitable growth with the help of the strong leadership, coming from the three companies, that will manage the combined company.
Bloomberg reports that the merger will also allow The Coca-Cola Company to consolidate its bottling operations around the world and cut expenses.
The company said in the press release that the Coca-Cola European Partners will provide a realized annual run-rate pre-tax savings of approximately $350-375 million within three years of closing the deal.
Ali Dibadj, an analyst at Sanford C. Bernstein, told Bloomberg that they have been saying for a year that the company needs to aggregate the bottlers in Europe.
"We're pleased that this has happened," he said. "We see significant opportunities to cut costs and drive top-line growth."
Coca-Cola Enterprises' shareowners will own 48 percent of the company, while Coca-Cola Iberian Partners' shareowners and The Coca-Cola Company will own 34 percent and 18 percent, respectively, of Coca-Cola European Partners' shares on a fully diluted basis, according to the press release.
Coca-Cola Enterprises' shareowners will also receive a one-time cash payment of $14.50 per share, aside from the one share of Coca-Cola European Partners.
