View Full Version : TCCC in talks to buy CCE North America

02-24-2010, 10:10 PM
According to this (http://online.wsj.com/article/SB10001424052748704240004575085871950146304.html?m od=WSJ_hpp_LEFTWhatsNewsCollection) Wall Street Journal article, The Coca-Cola Company is in talks to buy Coca-Cola Enterprises. Seems logical in light of the PBG deal. Should be an interesting few months as this develops. CCE's stock is up 26% in after hours trading after news of this broke.

02-24-2010, 11:14 PM
It's a mixed bag of news for me. On the one hand, if they merge CCE with their ownership in Philadelphia Coke, things in this area could change, and maybe they'd even build a distribution center/warehouse here (there are none in Delaware anymore, and the closest two are in Philadelphia and Baltimore). But on the other hand, they could take away work from the bottling arm, and send stuff through stores' warehouses instead of direct store delivery. Not to mention all the inevitable job losses.

02-24-2010, 11:42 PM
I doubt they'd be shifting to warehouse instead of DSD any time soon. When they tried that with Wal-Mart and Powerade, the independent bottlers sued and were successful in stopping that. I don't know that merchandisers, account managers, and drivers would be affected too much since the routes still have to be sold, merched, and delivered, regardless of who owns the distribution center. CCE employees at the customer development center and at home office should be worried, though.

02-25-2010, 07:00 AM
If this happens, it will certainly be a flip-flop of Coke's position.

Still, as far as business goes, it's probably a smart move. It would certainly lead to job losses and changes in distribution, but it would also give Coke more control and allow them to cut costs.

02-25-2010, 08:02 AM
IMHO, this will make no real difference in what happens "on the ground" in terms of bottling. Other than in the Philadelphia area, its just one big company taking over another. In that particular area, of course, you do have contiguious territories now under common ownership and economies of scale might apply.

On the business side, this is interesting. It makes KO a much larger company. In terms of debt, pension residual debt, number of employees, physical footprint on the ground and its accompyning liability, etc.

One would expect a similar offer for CCBCC, which is likewise just a stock company. Actually KO already owns some of CCBCC's North Carolina territories, the result of a 1980s "war" between the two which was settled by KO leasing the areas to CCBCC. The remaining bottlers seem to be hardcore privatiers that have already turned offers from CCE down for years.

Since this is limited to North America, one would assume that CCE - Europe (UK, France, Belgium) will either be spun off as a Euronext listed London or Paris based company, or merged into Helenic.

02-25-2010, 12:21 PM
Actually, the European operations would acquire operations in Germany, Norway and Sweden, and remain a public company.

And the CCBCC territories you're referring to are part of the Piedmont Coca-Cola Bottling Partnership, which is now only minority owned by Coke (22.7%), and the rest owned by CCBCC.

02-25-2010, 04:46 PM
The deal isn't expected to close until the 4th Quarter of 2010. Here's the official website:

COCA-COLA SYSTEM EVOLUTION (http://www.kosystemevolution.com/)

02-25-2010, 10:11 PM
The folks at DPSG seem to like this development.

Dr Pepper Soars on Speculation Coca-Cola to Pay Fees (Update2) - BusinessWeek (http://www.businessweek.com/news/2010-02-25/dr-pepper-soars-on-speculation-coca-cola-to-pay-licensing-fees.html)

From some of what I've read today, both Coke and Pepsi seem to have a long-term goal of moving away from direct distribution -- especially with large chain stores.

02-25-2010, 10:29 PM
If Pepsi paid $900 million, who knows what Coke will pay - they distribute more DPS volume than Pepsi. And I wonder if they'll have to give up any brands like Pepsi did - I know CCE has Dr Pepper, Schweppes, Canada Dry, Squirt, and Cactus Cooler in different areas.

02-28-2010, 03:37 PM
I work in cce vending and was wondering if anybody thinks the ko takeover will affect the full service (vending) side of the business.

02-28-2010, 05:12 PM
fusion - could you explain the ccbcc and philly coke ownership stuff you were talking about?

also, what's this about getting out of dsd? i can't see it happening, can you guys?

02-28-2010, 09:15 PM
Coca-Cola already owns Philadelphia Coke - they announced the deal a while ago, they quietly closed it about a year or so ago. The owner, Bruce Llewelyn, had wanted to get out of the business for a while, and there was talk that CCE was going to buy Philadelphia. But that never happened, obviously. A group headed by Carl Ware (highest ranking minority at Coke at the time) was also interested, but that fell through.

I don't think a lot has changed, though. They did restructure before the buyout, and jobs were eliminated, and people left (then president Ron Wilson now runs Skinny Water). In some areas they have an RAR/BCR type system, and others had traditional salespeople. I hear they now work in teams of three, with more than one of them writing orders. I don't think anyone is left from my days there. Maybe one or two people, that's it.

I think they are also using Philadelphia as a test market for some items, rather than the ones they regularly use.

All their trucks run out of Philadelphia, except for those from a sales center in Marmora, NJ, which is way down the NJ shore, and just too far away from Philadelphia. There is a main building that is the HQ and bottling line, and a separate building called SDS (sales and distribution services) across the street. I think they also bought a third building on that corner. They do have sales centers in various locations in PA and NJ, which are offices for district managers and sales center managers, and meeting space/POS storage for everyone else. Over in Moorestown, NJ they have a can plant. They also have a customer service center.. I think it's in Marlton NJ.

As for the Coke/CCBCC thing....

I don't know all the details, but Piedmont Coca-Cola Bottling Company is a joint venture between Coke and CCBCC. The JV was started in 1993. Coke and CCBCC each owned 50% of the JV, and CCBCC received a fee for managing the sales centers, and also provided product to them as well. As I mentioned earlier, Coke now only owns 22.7% of Piedmont, and it's been that way for at least the last five years.

CCBCC is also a member of South Atlantic Canners in Bishopville, SC, and they receive a fee for managing those operations.

02-28-2010, 09:17 PM
I can see them pulling some items out of DSD, like maybe Dasani 24 packs, to direct ship and more competitively compete on price. It is possible that they could still have us merchandise them, or not.

I know with the military accounts, they've shifted some items to their warehouses, like some of the energy drinks.