Coca-Cola Buying its Biggest Bottler
By Dave DeWitte
CEDAR RAPIDS - The largest Coca-Cola bottler in North America, with operations in Cedar Rapids, has agreed to sell its bottling operations to the soft drink company.
Coca-Cola Enterprises produces and distributes about 75 percent of Coca-Cola's products in North America. The acquisition announced Thursday morning will give Coca-Cola direct control over 90 percent of the total North American bottling and distribution volume of its products.
Shareholders of Coca Cola Enterprises will receive $10 per share in cash and one share in a new Coca Cola Enterprises that is focused on the European market in the deal.
The deal is similar in many ways to rival Pepsi-Cola's acquisition of its largest bottler.
About 55 employees work at Midwest Coca-Cola of Cedar Rapids, 851 66th Ave. SW, which distributes Coca-Cola products bottled in the Quad Cities to communities in Eastern Iowa. Most of the employees drive routes for the company delivering Coca-Cola products to retailers. They only learned of the acquisition Thursday morning, and had not yet learned many details, employees said.
Atlanta-based Coca-Cola Co. said the deal would generate "immediate efficiencies" that are expected to save operational costs of $350 million over four years, and should increase earnings per share by 2012.
Coca-Cola Co. Chairman and CEO Muhtar Kent said the company's North American business structure has remained basically unchanged since the bottling company, Coca-Cola Enterprises, was founded in 1986, while the market and industry have changed dramatically. He said Coca-Cola Enterprises will work reconfigure its manufacturing, supply chain and logistics operations achieve cost reductions over time.
"Coca Cola Enterprises Chairman and CEO John Brock said the deal would increase shareholder value, delivering over $4 billion in cash to its shareholders through cash distributions and share repurchases. He said the deal also enables shareholders to retain equity in a sales and distribution company in Europe with an improved growth outlook.
One of Iowa's largest Coca-Cola bottlers, Coca-Cola Atlantic Bottling, is not part of the deal. Coca-Cola Atlantic Co. is a privately owned independent bottler headquartered in Atlantic. It also has operations in Waukee.
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