Coca-Cola Unit Files Plan for Huge Stock Offering
Coca-Cola Enterprises, the newly established bottling subsidiary of Coca-Cola Co., filed Tuesday for one of the largest public offerings in history to pay for its recent purchase of two bottling companies.
An estimated $1.5 billion could be raised by Coca-Cola Enterprises, according to a filing with the Securities and Exchange Commission. The company is seeking $21 to $24 a share in the offering of 71.4 million shares. Of these, 60.69 million shares are to be sold in the United States and Canada and another 10.71 million in Europe.
The offering will help pay for acquisition of Beatrice Cos.’ bottling operations and the JTL Corp. bottling company, which Coca-Cola agreed to buy this year for a total of $2.4 billion. The Beatrice operations cost $1 billion, JTL’s $1.4 billion.
After the deals are completed later this year, Coca-Cola Enterprises will own bottlers accounting for almost one-third of its domestic sales of soft drinks. It will bottle Coca-Cola soft drinks, including Coke, Sprite and Tab, in 28 states, the District of Columbia and the Virgin Islands.
Analysts said that by forming a public company, parent Coca-Cola will not have to list the subsidiary’s debt on its own books, thus protecting the parent company’s earnings from dilution due to the recent acquisitions.
Although the company declined to indicate how much it hoped to raise, some analysts predicted that it would exceed the initial public offering made by Henley Group earlier this year and rival the proposed offering of shares in Consolidated Rail Corp. Henley raised $1.2 billion in the United States and $85 million abroad, and the proposed Conrail offering is expected to total at least $1.7 billion.
After the offering, Coca-Cola will continue to own 68 million shares, a 49% interest in the outstanding stock of Coca-Cola Enterprises if underwriters do not exercise an over-allotment option, under which they can claim an additional 5 million shares.
Until recently, soft-drink firms avoided major involvement in the bottling of their products, preferring to make money by selling syrup or concentrate directly to fountain outlets, such as McDonald’s and Burger King, and to a network of franchised bottlers who mix the syrup into soda and distribute it to retailers.
However, Coca-Cola and its rival, Pepisco, have been gobbling up bottlers to gain greater control of their manufacturing, distribution and marketing operations.
