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| 8-K - COCA COLA ENTERPRISES FORM 8K - COCA COLA ENTERPRISES INC | cocacola8k_22510.htm |
Global Public Affairs &
Communications
P.O. Box
1734, Atlanta, GA 30301
Telephone
(404) 676-2683
FOR
IMMEDIATE RELEASE
THE COCA-COLA COMPANY AND
COCA-COLA ENTERPRISES STRATEGICALLY ADVANCE AND STRENGTHEN THEIR
PARTNERSHIP
The
Coca-Cola Company to Acquire CCE’s North American Bottling Business
CCE
Has Agreed In Principle To Buy The Coca-Cola Company’s Bottling Operations In
Norway And Sweden, And To Obtain The Right To Acquire The German
Bottler
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Advancement
fully aligns with the Coca-Cola system’s 2020 Vision and drives long-term
value for all shareowners.
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Evolves
The Coca-Cola Company’s North American business to more profitably deliver
the world’s greatest brands in the largest NARTD profit pool in the
world.
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CCE
shareowners will benefit from the improved financial growth profile and
expansion of the Western European
business.
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The
Coca-Cola Company will generate immediate efficiencies with expected
operational synergies of $350 million over four years, and the
transactions, which are substantially cashless, are expected to be
accretive to EPS on a fully diluted basis by
2012.
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CCE
shareowners to exchange each CCE share for a share in a new CCE, focused
solely on Europe, and $10 per share in cash at
closing.
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-more-
ATLANTA, Feb.25, 2010 – The
Coca-Cola Company (NYSE: KO) and Coca-Cola Enterprises Inc. (NYSE: CCE) announce
that they have entered into agreements that will strategically advance the
Coca-Cola system in North America and drive long-term value for all
shareholders. In addition, the parties have an agreement in principle to expand
CCE’s European business.
“Our 2020
Vision calls for decisive and timely action to continuously improve and evolve
our global franchise system to best serve our customers and consumers
everywhere. Consistent with the 2020 Vision, our roadmap for winning together,
we act today as an aligned system,” said The Coca-Cola Company’s Chairman and
Chief Executive Officer Muhtar Kent. “We are not acquiring CCE, rather we are
acquiring their North American operations, and they remain one of our key
bottling partners with world-class management, financial and operational
capabilities. We have a strong and unrelenting belief in our unique and thriving
global bottling system. Our new North American structure will create an
unparalleled combination of businesses, which will serve as our passport to
winning in the world’s largest nonalcoholic ready-to-drink profit pool. This
transaction offers compelling value to both The Coca-Cola Company and CCE
shareowners and will create substantial and sustainable benefits for both
companies’ stakeholders.”
Mr. Kent
continued, “Our North American business structure has remained essentially the
same since CCE was founded in 1986, while the market and industry have changed
dramatically. With this transaction, we are converting passive capital into
active capital, giving us direct control over our investment in North America to
accelerate growth and drive long-term profitability. We will work closely with
our bottling partners to create an evolved franchise system for the unique needs
of the North American market. Additionally, we will reconfigure our
manufacturing, supply chain and logistics operations to achieve cost reductions
over time. Importantly, the creation of a unified operating system will
strategically position us to better market and distribute North America’s most
preferred nonalcoholic beverage brands. At the same time, in Europe, we are
further strengthening our franchise system to provide broader, contiguous
geographic coverage and optimizing our marketing and distribution
leadership.”
CCE’s
Chairman and Chief Executive Officer John Brock said, “This transformation
creates significant near-term shareowner value through the sale of the North
American business for fair value, delivering over $4 billion in cash to CCE
shareowners, through cash distributions and planned share repurchases. At the
same time, this enables our shareowners to retain equity in a sales and
distribution company with an improved growth profile. In the future,
CCE shareowners will also benefit from the expansion of our European business
and our improved financial flexibility.”
-2-
Mr. Brock
added, “CCE remains the preeminent Western European bottler and a key strategic
partner with The Coca-Cola Company. Our European business
serves an attractive market with growing volumes and profit driven by rising per
capita consumption. As such, CCE will have an
improved profile with enhanced revenue, margins and EPS growth prospects. Together with The
Coca-Cola Company, we will continue to improve the effectiveness of our
operations in our expanded presence in Europe. These actions strengthen
our ability to compete effectively and sustainably in Europe and represent the
beginning of an exciting new era of long-term growth for CCE’s business and
shareowners.”
Mr. Kent
concluded, “This is a truly historic day for the Coca-Cola system. As the world’s leading
beverage Company, we are very excited about the vast opportunities before us and
I can say with confidence there is no better business to be in. Over the next several
years, the nearly $650 billion dollar global nonalcoholic ready-to-drink
beverage industry is expected to grow faster than worldwide GDP and we are best
positioned to capitalize on this enormous industry opportunity in North America
and Europe. These joint actions further reinforce our confidence in achieving
our 2020 Vision to more than double system revenue and double servings to over
3 billion
per day. With our system more aligned than ever, the timing is right, and we
believe that these actions will usher in a new era of winning for our Coca-Cola
system.”
Details of the
Transactions
The
Coca-Cola Company, in a substantially cashless transaction, will acquire CCE’s
entire North American business, which consists of approximately 75 percent of
U.S. bottler-delivered volume and almost 100 percent of Canadian
bottler-delivered volume. At the close of the transaction, The Coca-Cola Company
will have direct control over approximately 90 percent of the total North
America volume, including its current direct businesses. The Coca-Cola Company’s
acquisition of the assets and liabilities of CCE’s North American business
includes consideration of The Coca-Cola
Company’s current 34 percent 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.
In a
concurrent agreement, The Coca-Cola Company and CCE have agreed in principle
that CCE will buy The Coca-Cola 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 Coca-Cola Company’s 83 percent
equity stake in its German bottling operations 18 to 36 months after closing for
fair value.
-3-
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 percent of this new entity.
CCE will
provide its shareowners, excluding The Coca-Cola Company, with a special
one-time cash payment of $10 per share. In connection with the
transactions, CCE expects to raise initial debt financing of up to 3.0x EBITDA
to pay shareowners $10 per share in cash at closing, to acquire the Norway and
Sweden bottlers and to fund the expected share repurchase
program. Following completion of the transaction, it is expected that
CCE will adopt a program to repurchase up to approximately $1 billion of shares
and a policy of paying an expected annual dividend of $0.50 per share subject to
the discretion of CCE’s Board of Directors and its consideration of various
factors.
The
Coca-Cola Company and CCE expect the transactions to close in the fourth quarter
of 2010.
About CCR-USA and
CCRC
At the
close, The Coca-Cola Company will rename the sales and operational elements of
the North American businesses Coca-Cola Refreshments USA, Inc. (“CCR-USA”) and
Coca-Cola Refreshments Canada, Ltd. (“CCRC”), which will be wholly-owned
subsidiaries of The Coca-Cola
Company. Following the close, The Coca-Cola Company will combine the Foodservice
business, The Minute Maid Company, the Supply Chain organization, including
finished product operations, and our company-owned bottling operations in
Philadelphia with CCE’s North American business to form CCR-USA and CCRC. In the U.S., CCR-USA will
be organized as a unified operating entity with distinct capabilities to include
supply chain and logistics, sales and customer service operations. In Canada,
CCRC will be a single dedicated production, marketing, sales and distribution
organization. The Coca-Cola Company’s remaining North American operation will
continue to be responsible for brand marketing and franchise support. Details regarding the
structure, leadership and integration plans will be forthcoming.
Once
completed, the transactions are expected to generate operational synergies of
approximately $350 million over four years for The Coca-Cola Company and are
expected to be accretive to EPS on a fully diluted basis by 2012. Further, in
North America, this will generate system synergies that will increase the growth
rate and cash flow on a pro forma basis over time. Pro forma for this
acquisition, the North American business, including CCR-USA and CCRC, would have
generated approximately $19.2 billion in revenues and $3.6 billion of EBITDA in
2009.
-4-
The Coca-Cola Company 2010
Outlook
As a result of these agreements, The
Coca-Cola Company has not made any share repurchases during the current fiscal
year and will continue to be out of the market until the close of these
transactions. However, the Company remains committed to repurchasing $1.5
billion in 2010.
About new
CCE
CCE will
be The Coca-Cola Company's strategic bottling partner in Western Europe and the
third-largest independent bottler globally. Reflecting CCE’s position
as The Coca-Cola Company's strategic bottling partner in Western Europe, the
companies will enter into a 10+10 year bottling agreement and a 5-year incidence
pricing agreement. Pro forma, including the
contributions of Norway and Sweden, CCE would have generated approximately $7.3
billion in revenues, $850 million in operating income, and $1.2 billion of
EBITDA in 2009.
At
closing, before planned share repurchases, CCE expects to have net debt of
approximately $2
billion. Immediately
after closing and before share repurchase, CCE is expected to have approximately
350-360 million outstanding shares on a fully diluted basis, substantially
comparable to the publicly owned shares of CCE today.
Shortly
after closing, the Board of CCE is expected to announce a planned share
repurchase program of approximately $1 billion and an initial annual dividend of
$0.50 per share. Payment of cash dividends and stock repurchases by CCE will be
at the discretion of CCE’s Board of Directors in accordance with applicable law
after taking into account various factors, including, but not limited to, CCE’s
financial condition, operating results, current and anticipated cash needs and
plans for growth. Therefore, no assurance can be given that CCE will pay any
dividends to its shareowners or make share repurchases, and no assurance can be
given to the amount of any such dividends or share repurchases if CCE’s Board of
Directors determines to do so.
CCE will
retain the Coca-Cola Enterprises Inc. corporate name and remain headquartered in
Atlanta. CCE will
continue to be traded on the NYSE under the CCE ticker. John Brock, Chairman and
Chief Executive Officer, Bill Douglas, Chief Financial Officer, Hubert Patricot,
President of the European Group, and other members of the CCE corporate
management team will continue to lead the company. In addition, the
current independent directors will continue to comprise the CCE
Board.
CCE 2010
Outlook
As a
result of these agreements, CCE has not made any share repurchases during the
current fiscal year, and it does not plan to do so before the transactions
close. CCE intends
to provide additional details on FY 2010 outlook during its upcoming first
quarter call.
-5-
Additional
Information
CCE’s
independent Affiliated Transaction Committee recommended that CCE’s Board
approve the transactions. The Boards of Directors of both The Coca-Cola Company
and CCE have approved the transactions, which are subject to approval by CCE’s
public shareowners and customary regulatory approvals.
Allen
& Company and Goldman Sachs & Co. acted as financial advisors to The
Coca-Cola Company. Skadden, Arps, Slate, Meagher & Flom LLP acted as legal
counsel. Cleary Gottlieb Steen & Hamilton LLP and Wilson Sonsini
Goodrich & Rosati provided antitrust counsel.
Credit
Suisse and Lazard acted as financial advisors to CCE and Cahill Gordon &
Reindel LLP acted as legal counsel. Greenhill & Co. acted as
financial advisor to the Affiliated Transaction Committee and McKenna Long &
Aldridge LLP provided legal counsel.
For more
information about the transactions, please access our transaction specific
website at: www.KOsystemevolution.com.
Conference
Call/Webcast
The
Coca-Cola Company and Coca-Cola Enterprises are hosting a joint conference call
with investors and analysts to discuss our transactions today at 9:30 a.m.
(EST). We invite investors to listen to the live audiocast of the conference
call at either web site, www.thecoca-colacompany.com
or at www.cokecce.com in
the “Investors” section. Further, the “Investors” section of each
website includes a reconciliation of non-GAAP financial measures that may be
used periodically by management when discussing their financial results with
investors and analysts to our results as reported under GAAP.
-6-
About The Coca-Cola
Company
The
Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, refreshing
consumers with more than 500 sparkling and still brands. Together with
Coca-Cola, recognized as the world’s most valuable brand, the Company’s
portfolio includes 14 billion dollar brands, including Diet Coke, Fanta, Sprite,
Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply and Georgia Coffee.
Globally, we are the No. 1 provider of sparkling beverages, juices and juice
drinks and ready-to-drink teas and coffees. Through the world’s largest beverage
distribution system, consumers in more than 200 countries enjoy the Company’s
beverages at a rate of 1.6 billion servings a day. With an enduring commitment
to building sustainable communities, our Company is focused on initiatives that
protect the environment, conserve resources and enhance the economic development
of the communities where we operate. For more information about our Company,
please visit our web site at www.thecoca-colacompany.com.
The Coca-Cola Company
Forward-Looking Statements
This
press release may contain statements, estimates or projections that constitute
“forward-looking statements” as defined under U.S. federal securities laws.
Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,”
“project,” “will” and similar expressions identify forward-looking statements,
which generally are not historical in nature. Forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from The Coca-Cola Company’s historical experience and our
present expectations or projections. These risks include, but are not limited
to, obesity and other health concerns; scarcity and quality of water; changes in
the nonalcoholic beverages business environment, including changes in consumer
preferences based on health and nutrition considerations and obesity concerns;
shifting consumer tastes and needs, changes in lifestyles and competitive
product and pricing pressures; impact of the global credit crisis on our
liquidity and financial performance; our ability to expand our operations in
developing and emerging markets; foreign currency exchange rate fluctuations;
increases in interest rates; our ability to maintain good relationships with our
bottling partners; the financial condition of our bottling partners; our ability
and the ability of our bottling partners to maintain good labor relations,
including the ability to renew collective bargaining agreements on satisfactory
terms and avoid strikes, work stoppages or labor unrest; increase in the cost,
disruption of supply or shortage of energy; increase in cost, disruption of
supply or shortage of ingredients or packaging materials; changes in laws and
regulations relating to beverage containers and packaging, including container
deposit, recycling, eco-tax and/or product stewardship laws or regulations;
adoption of significant additional labeling or warning requirements; unfavorable
general economic conditions in the United States or other major markets;
unfavorable economic and political conditions in international markets,
including civil unrest and product boycotts; changes in commercial or market
practices and business model within the European Union; litigation
uncertainties; adverse weather conditions; our ability to maintain brand image
and corporate reputation as well as other product issues such as product
recalls; changes in legal and regulatory environments; changes in accounting
standards and taxation requirements; our ability to achieve overall long-term
goals; our ability to protect our information systems; additional impairment
charges; our ability to successfully manage Company-owned bottling operations;
the impact of climate change on our business; global or regional catastrophic
events; and other risks discussed in our Company’s filings with the Securities
and Exchange Commission (SEC), including our Annual Report on Form 10-K, which
filings are available from the SEC. You should not place undue reliance on
forward-looking statements, which speak only as of the date they are made. The
Coca-Cola Company undertakes no obligation to publicly update or revise any
forward-looking statements.
-7-
About Coca-Cola Enterprises
Inc.
Coca-Cola
Enterprises Inc. is the world's largest marketer, distributor, and producer of
bottle and can liquid nonalcoholic refreshment. CCE sells
approximately 80 percent of The Coca-Cola Company's bottle and can volume in
North America and is the sole licensed bottler for products of The Coca-Cola
Company in Belgium, continental France, Great Britain, Luxembourg, Monaco, and
the Netherlands. For more information about our Company, please visit our web
site at www.cokecce.com.
Coca-Cola Enterprises Inc.
Forward-Looking Statements
Included
in this news release are forward-looking management comments and other
statements that reflect management’s current outlook for future periods. As
always, these expectations are based on currently available competitive,
financial, and economic data along with our current operating plans and are
subject to risks and uncertainties that could cause actual results to differ
materially from the results contemplated by the forward-looking statements. The
forward-looking statements in this news release should be read in conjunction
with the risks and uncertainties discussed in our filings with the Securities
and Exchange Commission, including our most recent annual report on Form 10-K
and subsequent SEC filings.
Important Additional
Information and Where to Find It
This
communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or
approval. In connection with the proposed transaction and required
shareowner approval, Coca-Cola Enterprises Inc. (“Company”) will file relevant
materials with the Securities and Exchange Commission (the “SEC”), including a
proxy statement/prospectus contained in a registration statement on Form S-4,
which will be mailed to the shareowners of the Company after the registration
statement is declared effective. The registration statement has not yet become
effective.
SHAREOWNERS
OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC,
INCLUDING THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
-8-
Shareowners
may obtain a free copy of the proxy statement/prospectus, when it becomes
available, and other documents filed by the Company at the SEC’s web site at
www.sec.gov. Copies of the documents filed with the SEC by the
Company will be available free of charge on the Company’s internet website at
www.cokecce.com under the tab “Investor Relations” or by contacting the Investor
Relations Department of Coca-Cola Enterprises at 770-989-3246.
Participants in the
Solicitation
Coca-Cola
Enterprises (“Company”) and its directors, executive officers and certain other
members of its management and employees may be deemed to be participants in the
solicitation of proxies from its shareowners in connection with the proposed
transaction. Information regarding the interests of such directors
and executive officers was included in the Company’s Proxy Statement for its
2009 Annual Meeting of Shareowners filed with the SEC March 3, 2009 and a Form
8-K filed on December 18, 2009 and information concerning the participants in
the solicitation will be included in the proxy statement/prospectus relating to
the proposed transaction when it becomes available. Each of these
documents is, or will be, available free of charge at the SEC’s website at
www.sec.gov and from the Company on its website or by contacting the Shareowner
Relations Department at the telephone number above.
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FOR
MORE INFORMATION, PLEASE CONTACT:
The Coca-Cola
Company:
Jackson
Kelly, Investor Relations
Tel: +1
(404) 676-7563
Dana
Bolden, Media Relations
Tel: +1
(404) 676-2683; Email: pressinquiries@na.ko.com
Coca-Cola Enterprises
Inc.:
Thor
Erickson, Investor Relations
Tel: +1
(770) 989-3110
Laura
Brightwell, Media Relations
Tel: +1
(770) 989-3023