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Coke bottlers fizz
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June 16, 1999: 7:49 a.m. ET
Hellenic Bottling and London's Coca-Cola Beverages plan $3B share swap
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LONDON (CNNfn) - London-based soft drinks bottler Coca-Cola Beverages announced plans to merge with Athens-listed Hellenic Bottling Co. Wednesday in a 1.9 billion pound ($3.0 billion) share swap.
Hellenic, which is valued at $3.9 billion, is active in its domestic market, Ireland and Nigeria and provides a stable counterbalance to CCB's extensive interests in central Europe and Italy, said analysts. The combined company will have a market value of some $6 billion.
The companies plan to form a new Athens-listed company, which would be 56 percent controlled by Hellenic's shareholders and 44 percent by CCB. The company has yet to be named but will have a secondary listing in London.
Analysts had expected CCB (CCB), which is 50.1 percent owned by Coca-Cola Co. (KO) to hit the acquisition trail following its flotation last year after being spun off by Coca-Cola's Australian arm, Amatil.
"Things have changed since the IPO," said George Maddison, equity analyst at CSFB which advised CCB on both deals. "At the time eastern Europe was a strong near-term bet."
The fall-out in emerging markets last year pushed CCB to a pretax loss of 15.5 million pounds last year on flat revenue after pulling back from plants in Belarus and the Ukraine.
Hellenic's first-quarter profit dipped 12.5 percent to 6.2 billion drachmas ($19.9 million).
"The company will now have a profile with Greece, Italy, Switzerland, Austria and Ireland driving growth plus a swathe of central Europe," said Maddison. Hellenic would also share the "anchor bottler" status enjoyed by CCB from parent Coca-Cola, which would hold a 22 percent stake in the new company.
Maddison said the deal would also solve a management succession issue for Hellenic, with CCB's Chairman and Chief Executive Neville Isdell becoming chief executive of the merged entity.
He said the Athens listing would be attractive to investors seeking a convergence play on Greece's expected entry to the euro-zone within the next three years.
The terms would see CCB shareholders receive one share in the new company for every 9.5 CCB shares they own. Hellenic's offer values CCB shares at 179.9 pence, a 57 percent premium to Monday's closing price.
CCB shares traded at 144 pence in early London trading, a rise of 25 percent after climbing up as 155 pence. Hellenic shares climbed 1.5 pence to 8,595 drachmas.
The deal is subject to regulatory approval and the solution of "significant structural issues" said the companies.
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Coca-Cola
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