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. Last Updated: 07/27/2016

Hellenic Buys Coke Bottler for $7Bln




LONDON -- Coca Cola Beverages PLC, the largest soft drink bottler in Italy and central and eastern Europe, said Wednesday it planned to merge with Athens-listed Hellenic Bottling Co. SA.


The pounds 4.3 billion ($6.8 billion) takeover by the Greek company comes less than a year after Coca-Cola Beverages, or CCB, listed in London after being spun off from Australia's Coca-Cola Amatil Ltd.


The company, which hoped to ride a wave of investor enthusiasm for emerging economies in central Europe, has faced a series of problems in markets such as Ukraine and Belarus since last July's listing.


Hellenic has also suffered badly from war in the Balkans, reporting heavy first-quarter losses in Serbia.


Analysts expressed surprise that CCB was the one being bought rather than the one buying, although they noted this was balanced by the fact that CCB chief executive Neville Isdell would keep his post.


The enlarged group f whose name is expected to include the words "Coca-Cola" f will have its primary listing in Greece but is likely to have a secondary listing in London, according to one industry source close to the company.


The deal is expected to generate cost savings as some manufacturing is rationalized and a single management team is formed. But there are not expected to be major job cuts since there are few geographical overlaps, except for Romania.


CCB bottles Coke, Sprite and Fanta in 13 European nations from the Baltics to the Adriatic, while Hellenic produces soft drinks and fruit juices in the Balkans, Russia, Ireland and Nigeria.


"The opportunities come from the contiguous properties. ? They will consolidate operations where it makes sense," the industry source said, adding that the lack of major overlaps should minimize regulatory problems.


Jonathan Goble, beverages analyst at Rabobank in London, agreed the geographic fit made sense.


"It's a logical move. Even when CCB was put together it was pretty obvious that in time there would be further consolidation," he said.


Under the terms of the planned merger, shareholders in CCB, which is 50.1 percent owned by U.S.-based Coca-Cola Co., would receive one new Hellenic share for every 9.5 CCB shares held.


The proposed merger would also include a partial cash alternative of 150 pence ($2.40) per CCB share. Assuming full take-up of the share offer, Hellenic shareholders would hold around 56 percent and CCB shareholders 44 percent of the enlarged group.


That will dilute the holding of the Leventis family, which currently controls some 80 percent of Hellenic.


Financing for the cash element of the deal is expected to be via bank debt. Hellenic, which has a market capitalization of around $4 billion, currently has debt of less than $100 million.