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U.S. Coca-Cola Bottler to Buy British Unit

Soft drinks: The deal strengthens its grip on Western Europe.

June 05, 1996|From Reuters

ATLANTA — Coca-Cola Enterprises Inc. said Tuesday it will purchase the British bottling operation shared by Coca-Cola Co. and Cadbury Schweppes for $1.85 billion, a move that dramatically expands its presence in Europe.

The deal, expected to close by Sept. 30, would make Atlanta-based Coca-Cola Enterprises the sole bottler of Coca-Cola and Cadbury Schweppes products in England, Scotland, Wales and the Isle of Man.

The world's largest Coke bottler already is buying Coca-Cola's operations in France and Belgium for $915 million in a separate transaction announced last month.

With the Belgian and French acquisitions, the new combination in Britain, and its position as sole Coca-Cola bottler in the Netherlands, Coca-Cola Enterprises will have a powerful grip on soft-drink bottling in Western Europe.

Coca-Cola Enterprises' shares closed Tuesday at a 52-week high of $34.375, up $2.75, on the New York Stock Exchange.

"The acquisition of the British bottling operations will be another significant step toward our objective of increasing the company's ownership in the high-growth, high-potential international market," said company Chief Executive Summerfield Johnston.

Industry analysts say the deal is especially good news for Coca-Cola Enterprises because annual soft-drink consumption, measured in unit case sales, is expected to rise faster in Europe than in the United States for years to come.

Prudential Securities analyst George Thompson said the company might expect 6% to 8% long-term annual growth in unit sales volume in its new European markets. That would compare with only 4% to 5% volume growth in the United States, he said.

Coca-Cola & Schweppes Beverage is 51% owned by Cadbury Schweppes and 49% by the Coca-Cola Co.

Coca-Cola also owns 40% of Coca-Cola Enterprises and stands to receive $955 million. The money, which will amount to a pretax gain of $350 million in the third quarter, will be used to pay down the beverage maker's short-term debt.

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