The Strategist

Coca-Cola Bottlers to Merge

07/31/2015 - 16:28

Three companies, involved in bottling and selling Coca-Cola in Europe, decided to merge their operations to simplify the production and improve efficiency. According to the newspaper The Wall Street Journal, negotiations between Coca-Cola Enterprises, Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetranke AG, which continued for almost a year, are in the final stage.

(c) Coca-Cola
(c) Coca-Cola
According to the newspaper The Wall Street Journal referring to informed sources, the independent Coca-Cola bottler in Europe, Coca-Cola Enterprises, is in talks with Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetranke AG about a possible merger of operations in the process of consolidating all Coca –Cola’s bottlers. The company Coca-Cola Iberian Partners, which serves the markets of Spain and Portugal, and is an independent bottler, and the German Coca-Cola Erfrischungsgetranke AG belongs to Coca-Cola. Negotiations has been continuing for about a year, and now, according to the newspaper, they are at the final stage, but still, there’s no guarantees that the transaction would be finally closed. Terms of constituents merger are unknown, but, as estimated by the publication, the volume of the transaction, if it would still be concluded, could reach several billion dollars. Coca-Cola Enterprises’ market value alone is $ 10.8 billion. The company is the sole licensed bottler Coca-Cola products in Belgium, France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway and Sweden.

The potential merger is part of the campaign to consolidate small bottler, ensuing in recent years, which Coca-Cola carries amid falling sales of soft drinks. This way, in 2013, through the merger of seven Spanish and one Portuguese bottlers, Coca-Cola Iberian Partners had been formed, which itself now can participate in the merger. In 2014, there was a deal to unite Southern and Eastern African bottling operations in the one company, that caters to the markets of 12 countries. Having become larger after the merger, the bottlers get more opportunities to advertise and sell Coca-Cola, and greater flexibility in the pricing of products. Shares of Coca-Cola Enterprises have reacted positively to reports of talks: at auction in the United States, they increased their value by 9.6%.