Three independent Coca-Cola bottlers have agreed to merge their operations to serve more than 300 million consumers in 13 Western European countries.
Coca-Cola Enterprises, the bottling group will merge with Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetranke, the German bottling business of the Coca-Cola Company. The merge is part of a push by Coca-Cola Company to consolidate and cut costs amid slowing sales.
The new company, named Coca-Cola European Partners (CCEP) will be the largest independent Coca-Cola bottling operation in the world with expected 2015 revenue of $12.6bn and earnings before interest, taxes, depreciation and amortization (EBITDA) of $2.1bn. The new company will be owned by Coca-Cola Enterprises, 48 percent; Coca-Cola Iberian Partners, 34 percent; and The Coca-Cola Company, 18 percent
Coca-Cola European Partners is supposed to achieve costs in the upwards of $350 million – $375 million within three years of the merger.
The new entity will serve Andorra, Belgium, Iceland, Luxembourg, Monaco, Norway, Portugal, Sweden, The Netherlands, Germany, Spain, Great Britain and France.
Coca-Cola European Partners will be headquartered in London but would be listed on the Amsterdam Euronext, the New York Stock Exchange and the Madrid Stock Exchange.
Muhtar Kent, CEO of The Coca-Cola Company, Sol Daurella, Executive Chairwoman of Coca-Cola Iberian Partners and John Brock, CEO of Coca-Cola Enterprises toast the merger. © Coca-Cola
Muhtar Kent, the Chairman and CEO of the Coca-Cola Company, said “formation of Coca-Cola European Partners was an important step in the systems evolution. It shows how Coca-Cola is adapting to meet the changing demands of the market,” he added.
The bulked up bottler would help more effectively compete and drive growth across Western Europe.
He didn’t rule out more bottling consolidation in the coming years.
Coke reported in July that volume sales in Europe were flat in the first six months of 2015 as revenue fell 8 percent to $2.65bn, weighed down a stronger dollar.
Coke’s global volume increased just 1percent in the first half of the year, hurt by sluggish sales of carbonated drinks as consumers shift to water and other beverages.
The Coca-Cola Company manufactures and sells concentrates, beverage bases and syrups to independent bottlers across the globe. Making concentrates is a higher-margin and less capital intensive business than bottling. Larger bottlers, though, have greater capacity for efficiency.
Coke has been eager to consolidate its operations around the world. In November 2014, it engineered a deal combining bottling operations in Southern and Eastern Africa into one serving 12 countries.
In 2013, it helped cement a merger among seven Spanish and one Portuguese Coca-Cola bottlers, creating the Iberian Partners business.