8-KAcquisitions & DispositionsOther EventsExhibits & Filings

COCA COLA CO 8-K Report, Acquisition Completed (Jun 13, 2007)

Filed June 13, 2007For Securities:KO

Summary

This 8-K filing by The Coca-Cola Company (KO) officially reports the completion of its acquisition of Energy Brands Inc. d/b/a Glaceau, a maker of enhanced water beverages, for approximately $2.9 billion in cash. This strategic move significantly expands Coca-Cola's presence in the rapidly growing enhanced water and beverage category, aligning with consumer trends towards healthier beverage options. The acquisition positions KO to compete more directly with rivals in the functional beverage market. The filing details the structure of the acquisition, including the merger of Glaceau into a subsidiary of Coca-Cola. Notably, Tata Tea entities retain a minority stake of approximately 28.7% in Glaceau, with provisions for Coca-Cola to acquire the remaining shares through a put and call option agreement, which Coca-Cola intends to exercise. Indemnification provisions are also outlined, with a portion of the merger consideration held in escrow to cover potential claims.

Key Highlights

  • 1Coca-Cola Company completed the acquisition of Glaceau (Energy Brands Inc.) on June 7, 2007, for approximately $2.9 billion in cash.
  • 2The acquisition marks a significant expansion for Coca-Cola into the enhanced water and functional beverage market.
  • 3Glaceau will operate as a subsidiary of Coca-Cola.
  • 4Tata Tea entities will retain approximately 28.7% ownership initially, with Coca-Cola holding options to acquire their stake fully.
  • 5Coca-Cola intends to exercise its call option to gain 100% ownership of Glaceau.
  • 6A portion of the acquisition price is held in escrow for indemnification purposes, with specific terms and durations for claims.
  • 7J. Darius Bikoff, a key figure from Glaceau, has provided a personal indemnity for specific representations.

Frequently Asked Questions

The acquisition of Glaceau is strategically important as it allows Coca-Cola to significantly expand its portfolio in the rapidly growing enhanced water and functional beverage market. This move aims to capture a larger share of consumer demand for healthier and specialized beverage options, strengthening Coca-Cola's competitive position against rivals in this segment.

The total cash consideration paid by The Coca-Cola Company for the acquisition of Glaceau was approximately $2.9 billion.

Initially, Coca-Cola acquired approximately 71.3% of Glaceau. However, the Tata Tea entities hold the remaining 28.7%. Coca-Cola has a call option and the Tata entities have a put option to transfer the remaining shares to Coca-Cola, and Coca-Cola currently intends to exercise its call option to achieve 100% ownership.

Yes, the acquisition includes indemnification provisions. Ten percent of the merger consideration has been placed in escrow to cover potential claims. Additionally, J. Darius Bikoff, a principal from Glaceau, has provided a personal indemnity agreement for specific representations to further protect Coca-Cola.