Coca-Cola bottler denies that merger deal is tax-motivated

One of three European CocaCola bottlers involved in a merger deal announced Thursday denied that the tieup is taxmotivated.

John Brock, the CEO of Atlantabased CocaCola Enterprises, an independent bottler that is the licensed bottler for CocaCola products in Belgium, France, Britain, Luxembourg, the Netherlands, Norway and Sweden, said at a press conference that the merger was carried out for operational and strategic reasons.

“This is not even remotely a taxdriven transaction,” he added.

In the deal, CocaCola Enterprises is to combine with CocaCola Erfrischungsgetranke, The CocaCola Company’s wholly owned German subsidiary; and CocaCola Iberian Partners, which is an independent bottler.

The company resulting from the merger, CocaCola European Partners, is to be based in London, a move that will allow CCE to reduce its exposure to a higher U.S. corporate tax rate.

The merged entity is to have annual revenues of some $12.5 billion.

Brock is to be the chief executive officer and Sol Daurella, current executive chairwoman of CocaCola Iberian Partners, the chairwoman of the combined company.

“It’s a major milestone and major transaction that will benefit all parties involved,” the CEO of The CocaCola Company, Muhtar Kent, said on a conference call.

Faced with declining softdrink sales in various markets, including Europe, CocaCola is looking to merger deals to reduce the costs and increase the efficiency of its bottling operations, The Wall Street Journal said.

CCE shareholders will have a 48 percent stake in the new CocaCola European Partners, while shareholders of CocaCola Iberian Partners will own 34 percent and The CocaCola Company will have an 18 percent stake.

The company resulting from the merger, which is subject to approval by CCE’s shareowners, regulatory clearance and other conditions, will have more than 50 bottling plants and around 27,000 employees.

Shares of The CocaCola Company, a Dow component, closed down 0.47 percent at $41.92 on Thursday, while CocaCola Enterprises rose 2.99 percent to close at $53.39.