Coca-Cola Co. (NYSE: KO) reported Thursday that the beverage conglomerate will acquire the North American business of its largest bottling company, according to Associated Press.
Coca-Cola will give up its 34 percent stake in bottler Coca-Cola Enterprises Inc. (NYSE: CCE), worth $3.4 billion, and assume $8.88 billion in debt.
In a separate deal, Coca-Cola will sell its own Norwegian and Swedish bottling operations to Coca-Cola Enterprises for $822 million. Coca-Cola Enterprises also gets an option to buy Coca-Cola's 83 percent stake in its German bottling operations.
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Coca-Cola Enterprises shareholders will get one share of a new Coca-Cola Enterprises company focused only on European bottling and a one-time $10-per-share payment. The company plans to issue debt to finance this payment and the European acquisition. It had 490 million shares outstanding at the end of fiscal 2009. Excluding Coca-Cola's stake, cash payouts should be about $3.2 billion to shareholders.
Following the deal, Coca-Cola will control about 90 percent of the bottling of its products in North America.
This is compared to rival PepsiCo's pending deal with Pepsi Bottling Group Inc. (NYSE: PBG) and PepsiAmericas Inc. (NYSE: PAI) will give the company control of 80 percent. That deal is expected to close by the end of the month.
Coca-Cola expects cost savings of $350 million over four years. It said the acquisition will add to earnings per share by 2012.
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