Coca-Cola Co. today announced it plans to buy the North American operations of its largest bottler, Coca-Cola Enterprises Inc., in a strategic reversal that would close a competitive gap after PepsiCo. reached a similar deal, Reuters reported.
“Coke couldn’t sit back while Pepsi delivered $600 million (or more) in synergies for reinvestment and then transformed its U.S. business model,” ConsumerEdge Research analyst Bill Pecoriello told Reuters.
In return for the taking control of the North American business, Coke will relinquish its 34% stake in Coke Enterprises, worth $3.21 billion at Wednesday’s close and assume $8.88 billion in CCE debt.
Coke Enterprises will remain a publicly traded company focused on Europe, with assets in countries including France and Belgium. As part of the deal, it will buy Coke’s bottling operations in Norway and Sweden, and have the right to buy the controlling interest in Coke’s German bottling business.
CCE will make a one-time payment of $10 a share to its stockholders, who will also receive shares of the new Coke Enterprises.
The transaction will help Coke cut costs and increase flexibility in its distribution. Coke’s announcement comes just as PepsiCo is due to close the $7.8 billion purchase of its largest bottlers, Pepsi Bottling Group Inc. and PepsiAmericas Inc.