Coca-Cola Acquisition of CCE North America: Deal Structure (2)

For Coca-Cola, gaining the type of cash flow and synergies that CCE North America brings came at a cheap price. To pay fair value for such a large business, with assets of $12.3 billion, is a phenomenal deal for Coke. Within Coca-Cola, a major reorganization has begun that will combine the acquired assets from CCE with other company segments to create a new, overarching business segment known as Coca-Cola Refreshments (CCR). This unit will be lead by the former President of the North American business unit with CCE, Steve Cahillane.[ "The Coca-Cola Company Finalizes Transaction with Coca-Cola Enterprises." Reuters.com. 3 Oct. 2010. Web. 4 May 2011. http://www.reuters.com/article/2010/10/03/idUS44374+03-Oct-2010+BW20101003 .] Accordingly, his expertise with the business should prove invaluable to Coca-Cola in bringing the unit in-house. The new CCR unit at Coca-Cola will be a combination of: “(1) CCE North America; (2) CCNA (Coca-Cola North America) Foodservice; (3) the Minute Maid and Odwalla juice businesses, (4) CCNA Supply Chain Operations, and (5) the Company-owned bottling operations in Philadelphia.”[ Ibid. ]

Whether the Coca-Cola/CCE deal will ultimately prove a fruitful endeavor for Coke is no question. By cutting out a layer of management and eliminating the entire CCE shareholder base from equity interest in the North American segment, Coca-Cola will undoubtedly realize massive synergies. Being such a recent deal, it is difficult to determine the types of synergies that Coke is seeing so far. As it turns out, Coca-Cola’s 2011 first quarter earnings report was released on April 26th, 2011, and indicates positive results for the acquisition so far. The company’s net revenue jumped 40%[ "2011 First Quarter Results." Coca-Cola: The Coca-Cola Company. 26 Apr. 2011. Web. 04 May 2011. http://www.thecoca-colacompany.com/dynamic/press_center/2011/04/2011-first-quarter-financial-results.html .] from the comparable period last year, giving clear indication as to the magnitude of this acquisition. The company says in its report, “Coca-Cola Refreshments (CCR) integration efforts are on plan, with expected 2011 net cost synergies of $140 to $150 million.”[ Ibid. ] Of the estimated $350 million in total synergies over four years, this is clearly a solid start to the first year of combined operations. The long-term success of the deal is a matter for further discussion, and is given consideration later on in this paper.

More posts from a paper on Coca-Cola M&A Activity (including merger with CCE):

Coca-Cola M&A Activity, CCE Acquisition: Executive Summary
Coca-Cola M&A Activity: Introduction
Coca-Cola M&A Activity: Product Trends
Coca-Cola M&A Activity: Demand and Economic Trends
Coca-Cola M&A Activity: Business Model Trends in the Beverage Industry
Coca-Cola M&A Activity: Beverage Industry Business Model Trends (2)
Coca-Cola M&A Activity: Company Strategic Objectives
Coca-Cola M&A Activity: Company Strategic Objectives (2)
Coca-Cola M&A Activity: Company Portfolio Analysis
Coca-Cola M&A Activity: Company Portfolio Analysis (2)
Coca-Cola M&A Activity: Company Portfolio Analysis (3)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor) (2)
Coca-Cola M&A Activity: Other Beverage Industry M&A Activity
Coca-Cola Acquisition of CCE North America: Deal Structure
Coca-Cola Acquisition of CCE North America: Deal Structure (2)
Coca-Cola Acquisition of CCE North America: Major Legal and Financial Players
Coca-Cola Acquisition of CCE North America: Regulatory and Shareholder Approval of the Transaction
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success (2)
Coca-Cola Acquisition of CCE North America: Conclusion to M&A Deal Analysis
Coca-Cola CCE Merger: Table of Contents and Works Cited List