Coca-Cola bottlers to merge in $27bn deal

Three of Europe’s main bottlers of Coca-Cola products are to combine in a $27 billion deal to simplify manufacturing at the world’s largest drink maker as it is seeks to cut costs at a time when consumers are shifting away from its famous sodas.

Coca-Cola Enterprises, the US-based bottler with exclusive Coke licences in several western Europe countries, will merge with its Iberian and German counterparts in the latest consolidation of the Coca-Cola Company's supply chain.

The three-way deal, announced yesterday, is one of the biggest consumer deals ever in Europe and will create a company with revenues exceeding $12.5 billion to be headquartered in London.

The deal is structured as a tax inversion, allowing CCE to reduce its exposure to US taxes and creating a new UK-domiciled company to be called Coca-Cola European Partners. It will trade in Amsterdam, New York and Madrid.

The merger comes as Coca-Cola is confronting a decline in fizzy-drinks sales, especially in developed markets. In response, the drinks group is looking to cut costs to boost profitability. Initiatives have included reducing the size of beverage bottles, generating more profit per ounce, as customers fall out of love with excess.

In an internal memo to staff, James Quincey, president of Coca-Cola in Europe, said that the deal would improve the company's ability to respond more swiftly to changing consumer trends. – Copyright The Financial Times Limited 2015