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COCA COLA CO 8-K Report, Material Agreement (Mar 3, 2010)

Filed March 3, 2010For Securities:KO

Summary

This 8-K filing from The Coca-Cola Company (KO) on March 3, 2010, details a significant business restructuring involving Coca-Cola Enterprises Inc. (CCE). The core of the announcement is a Business Separation and Merger Agreement, through which Coca-Cola Company intends to acquire 100% ownership of CCE, effectively bringing CCE's North American operations in-house as a wholly-owned subsidiary. CCE's non-North American businesses will be spun off into a new entity, International CCE Inc. (SplitCo), which will then be distributed to CCE's existing shareholders, excluding Coca-Cola Company's stake. This transaction aims to simplify Coca-Cola's operating structure and potentially enhance strategic alignment. Investors should note the financial implications, including CCE's outstanding indebtedness of up to $8.88 billion which will be managed as part of the transaction, and the cash consideration of $10.00 per CCE share (excluding shares held by KO). Additionally, Coca-Cola Company has agreed in principle to sell its Norwegian and Swedish bottling operations to CCE (which will become SplitCo) for $822 million, further reshaping its international footprint. The deal is subject to various conditions, including shareholder approval and regulatory clearances.

Key Highlights

  • 1The Coca-Cola Company (KO) entered into a Business Separation and Merger Agreement to acquire 100% of Coca-Cola Enterprises Inc. (CCE).
  • 2CCE's North American business will become a wholly-owned subsidiary of KO, while non-North American businesses will be spun off into a new entity, SplitCo.
  • 3CCE shareholders (excluding KO) will receive one share of SplitCo and $10.00 in cash per CCE share.
  • 4The transaction involves CCE's outstanding indebtedness of up to $8.88 billion.
  • 5KO agreed to sell its Norwegian and Swedish bottling operations to a CCE subsidiary (which will become SplitCo) for $822 million.
  • 6The deal is subject to customary closing conditions, including regulatory approvals and CCE shareholder approval.
  • 7Associated agreements include a Tax Sharing Agreement and an Employee Matters Agreement.

Frequently Asked Questions

The primary goal of the agreement is to allow The Coca-Cola Company to gain full ownership of Coca-Cola Enterprises Inc.'s North American operations. This involves separating CCE's non-North American businesses into a new entity (SplitCo) and merging CCE itself into a wholly-owned subsidiary of Coca-Cola Company, thereby consolidating operational control.

CCE shareholders, excluding The Coca-Cola Company and dissenting stockholders, will receive one share of the newly formed SplitCo and $10.00 in cash for each share of CCE common stock they hold. SplitCo will house CCE's former businesses outside of North America.

The transaction accounts for CCE's indebtedness, which could be up to $8.88 billion at the effective time. Coca-Cola Company will either make a cash payment to CCE or CCE may incur additional borrowings to reach this amount as part of the agreement, indicating KO will assume management or responsibility for this debt structure post-acquisition.

The Nordic Sale Transaction is an ancillary agreement where The Coca-Cola Company is selling its bottling operations in Norway and Sweden to a CCE subsidiary (which will become part of SplitCo) for $822 million. This move further refines Coca-Cola's international operational structure and generates proceeds from the sale.