8-KMaterial Agreements

COCA COLA CO 8-K Report, Material Agreement (Dec 29, 2006)

Filed December 29, 2006For Securities:KO

Summary

The Coca-Cola Company, through its wholly-owned subsidiary Coca-Cola South Asia Holdings Inc., has entered into a definitive agreement to acquire the remaining 65% of Coca-Cola Bottlers Philippines, Inc. (CCBPI) from San Miguel Corporation (SMC) and its subsidiaries. This transaction, valued at approximately $590 million, will result in Coca-Cola Company achieving 100% ownership of its Philippine bottling operations. The payment structure includes an upfront payment, an escrow amount for purchase price adjustments, and deferred payments over five years with interest. This acquisition signifies a strategic move to gain full control over a key international market. The agreement also includes non-compete clauses to protect Coca-Cola's business interests in the Philippines and globally for specified periods. A related Cooperation Agreement outlines mutual commitments for supply and services between Coca-Cola and SMC. Investors should note that the acquisition is subject to closing conditions and the terms of the agreements, including potential purchase price adjustments based on CCBPI's net asset value at closing.

Key Highlights

  • 1Coca-Cola Company to acquire the remaining 65% of Coca-Cola Bottlers Philippines, Inc. (CCBPI) for approximately $590 million.
  • 2Transaction will result in Coca-Cola Company achieving 100% ownership of CCBPI.
  • 3Deal involves an upfront payment of $370 million, a $100 million escrow for adjustments, and deferred payments totaling $120 million over five years with interest.
  • 4Acquisition aims to consolidate control over significant Philippine bottling operations.
  • 5Includes a three-to-five-year non-compete agreement for San Miguel Corporation (SMC) and its subsidiaries.
  • 6Purchase price is subject to adjustment based on CCBPI's net asset value at closing, with adjustments limited to the escrow amount.
  • 7A Cooperation Agreement has been established between Coca-Cola and SMC regarding supply and services.

Frequently Asked Questions

This 8-K filing announces a material agreement by The Coca-Cola Company to acquire the remaining 65% of its Philippine bottler, Coca-Cola Bottlers Philippines, Inc. (CCBPI), from San Miguel Corporation (SMC), thereby achieving full ownership of its Philippine operations.

The aggregate purchase price is approximately $590 million, subject to adjustment. Payment includes $370 million at closing, $100 million placed in escrow for adjustments, $20 million 18 months after closing, and $100 million on the fifth anniversary of closing, with deferred payments bearing interest.

San Miguel Corporation and its subsidiaries are restricted from engaging in the non-alcoholic beverage business that competes with The Coca-Cola Company globally for three years and specifically in the Philippines for five years. Certain carbonated soft drinks, sports drinks, energy drinks, and flavored water are also restricted in the Philippines for five years.

The purchase price is subject to adjustment based on the net asset value of CCBPI at closing compared to an agreed-upon 'NAV Peg'. Any adjustments, whether an increase or decrease, will be solely satisfied from and limited to the $100 million escrow amount.