In an effort to improve its business model and boost efficacy, Coke takes over bottling its beverages.

• Coca-Cola Co. will now control the operations of its largest North American bottler, Coca Cola Enterprises Inc., helping the company cut costs and increase flexibility in distribution.
• Apparently, Coke made the purchase in reaction to PepsiCo’s recent purchase of its top bottlers, Pepsi Bottling Group Inc. and PepsiAmericas Inc.
• Coke’s present business model — selling beverage concentrate and using CCE to bottle and distribute the drinks — has caused tension over the years around issues such as concentrate pricing.

Facts & Figures

• As a result of the deal, Coke will give up the 34% stake it has in CCE, which is valued at $3.2 billion as of 2/24/2010. Coke will also take on $8.88 billion in CCE debt.
• PepsiCo spent $7.8 billion in purchasing its bottlers.
• As of noon on 2/25/2010, CCE shares went up 34% to $25.63, and Coke’s shares rose almost 5% to $52.62.
• CCE shareholders will receive a one-time payment of $10 a share and will also receive shares of the new Coke Enterprises.

Best Quote

“Our North American business structure has remained essentially the same since CCE was founded in 1986, while the market and industry have changed dramatically.” – Muhtar Kent, CEO of Coca-Cola Co.