It is a spectacular financial operation, and especially a strategic shift. Twenty-four years after to be released of its bottling business, Coca-Cola is poised to regain control. At least in North America, his first market history. Altlanta Group yesterday announced an agreement to which it will acquire 100 of North American Coca-Cola Enterprises (CCE), its main bottler in the world, which represents 75 of Coca volumes sold in the United States, 100 in the Canada.
The transaction, valued at $ 12.3 billion, has been praised by the shareholders of Coca-Cola Enterprises. Society course practical 33 yesterday on Wall Street midday, management indicated that the agreement would provide an opportunity to make $ 4 billion to shareholders form including redemption of shares. The title of the House mother Coca-Cola Company, him, dropped by 4.3. Financially, the group is certainly that it will not get out of cash. But strategically, the merits of this complex movement remains to prove.
The original Coca-Cola was just himself: basis of its drink concentrate manufacturing, the bottling, distribution and marketing. Then, in 1986, the world leader in the sector has changed his and award a portion of its downstream activities. Is that the bottling and distribution are greedy in investment, in factories, fleets of trucks, etc. Ultimately, the profitability of the capital is there revealed significantly lower than in the production of the precious concentrate: last year, it did not exceed 12.4 in EAC, compared to 21.4 in Coca. Mid-1980s, the Group has therefore preferred out of its balance sheet assets of distribution, to devote its resources to other developments, while retaining control of fact of CEC, with 34 of the shares.
Economies to the key
Its arch-rival PepsiCo has followed the same path and brought him also its activities of bottling to Wall Street in 1999. But last year, he backtracked, and decided to reinstate Pepsi Bottling, for efficiency. At the time, the men of Coca provided them would not be such a slick. "We, the two branches were always clearly separated." "This is historic and we did not plan to change on this point," explained John Brock, the patron of EAC, "Echos" last October.
Today, it is but what is happening across the Atlantic. By recovering the assets of EAC in the United States and the Canada, "we are converting passive capital active capital, which will give us the direct control of our investments in North America to the fast and is pushing the profitability", argues Muhtar Kent, Coca pattern. A the key, according to him, savings of 350 million dollars in four years. And the hope of better resist on a difficult U.S. market for Coca lately: in 2009, volumes of EAC is decreased by 5. The giant of Atlanta is not fully to its strategy of starting. "Fundamentally, we believe always that the franchise model", i.e. agreements with non-integrated bottlers, "is the best to win against competitors", says branch. It is the model that will continue to apply in Europe, around the "new CEC". Downloading of its US assets, the bottler will get in Exchange distribution so far activities held by the Group Norway, Sweden, and probably in Germany. They will be added to assets located in France, Britain and the Benelux. And this "new CEC" refocused on Europe, will be more completely controlled by Coca-Cola. On both sides of the Atlantic, the Group lead so oddly opposite strategies.