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Three European Coca-Cola bottlers to merge in $31 billion company

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Staff writer ▼ | August 6, 2015
Three European bottlers of Coca-Cola drinks have agreed to merge in what will be one of the continent's largest consumer products deals ever.
Fluid merger   A huge consumer products deal
Coca-Cola Enterprises said it would combine with Coca-Cola Iberian Partners (CCIP) and the German bottling business of Coca-Cola to create a new company that will be the world's largest independent bottler of Coke drinks by net revenue, with business in 13 countries.

The transaction will give the new company - Coca-Cola European Partners (CCEP) - a value of 28 billion euros ($31 billion) including debt, a source involved in the deal said, adding that was based on the core earnings of all three companies, the planned synergies and CCE's current valuation.

CCEP will have annual revenue of $12.6 billion and earnings before interest, tax, depreciation and amortization (EBITDA) of $2.1 billion and will bottle and distribute Coca-Cola drinks in countries including Spain, France and Britain.

CCE shareholders will receive one share in the new company and a one-time cash payment of $14.50 a share. The cash portion, about $3.5 billion, will be funded via new debt issued by CCEP, according to the source, who declined to be identified by name.

The deal is structured as a so-called tax inversion, with CCE moving corporate headquarters to London and cutting exposure to higher U.S. taxes. CCE, now based in Atlanta, used to be the biggest Coke bottler in North America, but sold its U.S. operations to Coke in 2010, leaving it operating solely in Europe.

CCE shareholders will own 48 percent of the new company, with CCIP's shareholders owning 34 percent. Coca-Cola, the world's largest soft drink maker, will own 18 percent.

The new company will be based and incorporated in London and its shares will be traded on Euronext Amsterdam, the New York Stock Exchange and the Madrid Stock Exchange.

The combination is expected to result in synergies of $350 million to $375 million within three years of closing, helped by operating efficiencies, cost-savings and scale benefits.

The bottlers purchase soft drink concentrate from Coca-Cola, and then bottle and distribute the drinks. The new company will use its savings to increase investment in marketing and sales.