Global Coke Shakeup Announced

The Coca Cola Co and its Australian offshoot, Coca-Cola Amatil Ltd, unveiled a new European division and an asset reshuffle yesterday that will divide the world of Coke into three listed groups.

Coca Cola Amatil Ltd (CCA), which is already the largest Coca Cola bottler in the world outside the US, said it will group its European assets into a new unit to be split off and listed in London.

This unit, called Coca Cola Beverages (CCB), will be based in Vienna and have operations in 13 mostly-Eastern European countries.

CCA, which is 33 per cent owned by the Atlanta-based The Coca Cola Co (TCCO), will then focus on its Asia Pacific operations.

 

Coca Cola executives said CCA and CCB will be the vehicles for Cokes expansion in Europe and Asia.

These two anchor bottlers will strengthen our systems ability to capture the significant opportunities for future profitable growth and value creation in each region, TCCO chairman and ceo Douglas Ivester said in a statement.

The two companies will be well positioned to take advantage of future geopgraphical expansion in their respective region, Ivester said.

As part of the restructure, CCA will buy the parent companys Northern and Central Italian operations for US$979 million worth of cash and shares and fold it into CCB.

CCA will then buy the parent companys South Korean operations for US$460.5 million worth of CCA shares and A$128 million of debt.

After the restructure, the parent companys assets will be largely grouped into three separate listed vehicles -- TCCC for the Americas, CCA for Asia Pacific and CCB for Europe.

The parent company will have controlling stakes in all three, with an increase in its CCA holding to 40 percent from 33 per cent and an eventual holding of 50 per cent.

CCA said its existing shareholders will receive one CCB share for every one CCA share by way of a capital return to be approved by shareholder meetings in mid to late May.

Detailed documents, including an independent experts report with an expected value range for the CCB shares, will be despatched to shareholders in late April.

CCA said it intends to list the Vienna-based CCB in London by the end of June, although it has no plans to raise extra capital with the listing.

Existing CCA shareholders will be able to sell their CCB shares through a clearing mechanism, with institutional shareholders bidding for the shares in a formal book-building process to establish one price for the shares before listing.

CCB will include bottling operations in Italy, Poland, Belarus, Ukraine, Slovakia, Hungary, Czech Republic, Switzerland, Bosnia-Herzegovina, Croatia and Slovenia and Austria.

The restructure also included a management shakeup.

Current CCA managing director Norb Cole, who origially came from the Atlanta operations, will leave the company and be replaced by current TCCO executive David Kennedy from March 5. Fellow Coke executive Neville Isdell will become chief executive of CCB.

After the acquisitions, CCA and CCB are expected to sell a combined 1.5 billion unit cases of soft-drinks in 1998 for about A$6.584 billion (US$4.46 billion), up from 1.1 billion unit cases generating sales of A$4.83 billion in 1997.

Brokers and the market welcomed the deal, but were reluctant to give their complete approval until all of the details of the complicated deal are digested, particularly its Asian components.

Theyre expanding and the restructure looks terrific, but but I think Coca-Cola will be very carefully watched because of the problems with Asia, said Reynolds and Co dealer Peter Struk.

CCA has significant operations in the Philippines, Indonesia, Papua New Guinea, Australia, New Zealand and Fiji.

CCAs shares closed up 12 cents or almost one percent at A$12.87, giving it a market capitalisation of A$10.9 billion.

Earlier CCA announced its total net profit rose 73.1 percent to A$242 million in calendar 1997 on a 30.3 percent rise in revenues to A$4.83 billion. This compared with analysts forecasts for a net profit of about A$230 million.