Coca-Cola reveals multi-billion pound merger

06-Aug-2015 - Last updated on 07-Aug-2015 at 11:47 GMT

Coca-Cola Enterprises (CCE) is set to merge with two other European bottling firms to create the world’s largest independent Coca-Cola bottler.

The bottling group has agreed to combine its operations with the fizzy drinks company’s German subsidiary and Coca-Cola Iberian Partners (CCIP) in a three-way mega-merger.

The new bottling giant, named Coca-Cola European Partners (CCEP), will have more than 50 bottling plants serving more than 300M consumers across 13 countries.

The company, headquartered in London, will have annual sales of about £8bn and plans to cut costs by up to £242M within three years, against a backdrop of declining demand for fizzy drinks.

There is no indication yet whether there will be implications for production jobs or central services jobs at CCE’s sites in East Kilbride, Milton Keynes, Wakefield, Edmonton, Morpeth, Sidcup and Northampton.

‘Global system’s evolution’

Rising concerns over the health effects of sugar have prompted consumers to cut back on soft drinks with CCE’s second quarter results showing an overall dip in sales of 17.5%.

Coca-Cola’s chief executive Muhtar Kent said the new European company will be able to deliver better services to customers and drive profitable growth across multiple beverage categories.

Ownership of Coca-Cola European Partners (CCEP)

Coca-Cola Enterprises (CCE) - 48%
Coca-Cola Iberian Partners (CCIP) - 34%
Coca-Cola Company, via ownership of German subsidiary – 18%

“The creation of a larger, unified Coca-Cola bottling partner in western Europe represents an important step in our global system’s evolution,” said Kent said.

“We continue to adapt our business model to innovate, invest and grow along with the changing demands of the marketplace.”

CCE has more than 17 manufacturing sites across Europe and was one of many global firms that bottled Coca-Cola under license from the Coca-Cola Company.

The three-way deal was agreed with German bottler Coca-Cola Erfrischungsgetränke AG (CCEAG) and CCIP, which served Spain and Portugal.

CCE chief executive officer John Brock, who will take on the same role at CCEP, said the merger offered “clear synergies” for the company.

“The creation of Coca-Cola European Partners will build on each bottler’s capabilities to create more efficient operations in their respective markets across Western Europe,” he said.