Coca-Cola Enterprises Inc. (CCE) said Monday that it agreed to acquire Coca-Cola Co.'s (KO) bottling operations in Norway and Sweden for $822 million. In a filing with the U.S. Securities Exchange Commission, or SEC, the company said that its indirect unit Bottling Holdings (Luxembourg) s.a.r.l., and Coca-Cola entered into an agreement on Saturday, March 20, under which Bottling Holdings will buy all of the issued and outstanding shares of Coca-Cola Drikker AS and Coca-Cola Drycker Sverige AB from a subsidiary of Coca-Cola.
The company said the purchase price is subject to adjustment based upon the net working capital of the Norway and Sweden Companies at closing, and based upon EBITDA of the Norway and Sweden Companies for fiscal 2010. The acquisition is subject to various conditions, including the absence of legal prohibitions and the receipt of requisite regulatory approvals.
Coca-Cola Enterprises, the largest bottler of Coca-Cola drinks, noted that the latest acquisition is part of its merger agreement with Coca-Cola announced on February 25. Both companies then had agreed in principle that CCE will buy the company's bottling operations in Norway and Sweden for $822 million, subject to the signing of definitive agreements, and that CCE will have the right to acquire the company's 83% equity stake in its German bottling operations 18 to 36 months after closing for fair value.
Coca-Cola then agreed to acquire Coca-Cola Enterprises' entire North American business, which consists of about 75% of U.S. bottler-delivered volume and almost 100% of Canadian bottler-delivered volume. At the close of the transaction, Coca-Cola will have direct control over about 90% of the total North America volume, including its current direct businesses.
Coca-Cola currently owns approximately 34% of the outstanding common stock of Coca-Cola Enterprises.
On February 25, Coca-Cola Enterprises, its unit International CCE, Inc., and Coca-Cola's unit Cobalt Subsidiary LLC had entered into a Business Separation and Merger Agreement, under which Cobalt will merge with and into Coca-Cola Enterprises, which will continue as the surviving corporation and a wholly-owned subsidiary of Coca-Cola.
The North American deal includes consideration of Coca-Cola's current 34% equity ownership in CCE, valued at $3.4 billion, based upon a thirty day trailing average as of February 24, 2010. In addition, consideration includes the assumption of $8.88 billion of CCE debt and all of the North American assets and liabilities - including CCE's accumulated benefit obligation for North America of $580 million as of December 31, 2009, and certain other one-time costs and benefits.
Coca-Cola Enterprises then had agreed with Coca-Cola to expand CCE's European business. A new entity, which will retain the name Coca-Cola Enterprises Inc., will be created through a split-off that will hold CCE's European businesses. CCE's public shareowners will exchange each existing CCE share for a share in the new entity and will hold 100% of this new entity.
CCE closed Monday's regular trading session at $27.48, up $0.52 or 1.93%, on a volume of 4.3 million shares.
KO settled at $54.54 on Monday, down $0.21 or 0.38%, on a volume of 9 million shares.
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