Coca-Cola announced Thursday that it would pay $12 billion in order to acquire its North American bottler in a move that closely imitates a PepsiCo savings move a year ago. Pepsi bought their two largest bottlers as a means of reducing costs and managing production.
Coca-Cola is differentiating its choice to buy its bottler from that of its rival soda maker by calling it a “substantially cashless transaction,” according to reports. Pepsi’s purchase of it’s bottler was performed with $7.8 billion in cash and stock.
Why Coke has elected to employ $8.9 billion in debt rather than take a loan for cash is unclear as the average interest rate they would pay on the debt is more than they would on a new loan. It appears that Coca-Cola went through lengths to make it seem as though the transaction was not too similar to Pepsi’s when in fact the similarities are clear. The difference lies in Coke being less cost effective about it.
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