11 November 2015

European Commission approves Coca-Cola bottling transaction

The European Commission (Commission) has this week announced its approval under Article 6(1)(b) of the EU Merger Regulation of the acquisition of joint control by US drinks giant The Coca-Cola Company and Spanish beverage bottling specialist Cobega, S.A. of four European Coca-Cola bottling companies. The bottling companies being brought together under the merger operate across much of western Europe, including in Germany, Belgium, France, the UK, Luxembourg, the Netherlands, Spain, Portugal and the Nordics.

The merged entity, Coca-Cola European Partners Plc. will be headquartered in London and will be the world’s largest independent Coca-Cola bottler in terms of net revenues, with combined expected net revenues for 2015 of $12.6 billion.  It will serve more than 300 million consumers across 13 western European countries.

The Coca-Cola Company owns the Coca-Cola brand, licences the trademark and manufactures soft drink concentrates, syrups, fountain soft drink syrups and finished, ready to drink beverages, which it then sells to bottling companies.  It already controls German beverage company Coca-Cola Erfrischungsgetränke AG, one of the four bottling companies being brought together under the merger, whilst Cobega, S.A. controls Coca-Cola Iberian Partners S.A., a Coca-Cola bottler serving Spain and Portugal, and Vífilfell.  The fourth bottling company, Coca-Cola Enterprises, is the Western European bottler of Coca-Cola's beverage products.

Having examined the proposed transaction under the normal merger review procedure, the Commission concluded that despite the size of the combined entity, the acquisition does not raise competition concerns, both on the basis that the activities of the four bottling companies do not overlap geographically and also due to the fact that current customers of the bottling companies would continue to have sufficient alternative choices post-merger.

It is understood that Coca-Cola Enterprises will hold a 48% stake in the new bottling company, Coca-Cola Iberian Partners will own 34%, and The Coca-Cola Company will hold the remaining 18%.  The Coca-Cola Company is expected to enter into a 10 year bottling agreement with the merged entity, with the option to renew for a subsequent 10 years.

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