Coca-Cola Enterprises (CCE) Shareholders Approve Merger

Coca-Cola Enterprises Inc. CCE recently announced that its shareholders approved its pending merger with two other European bottlers of The Coca-Cola Company KO at a special shareholders' meeting held on May 24.

Last year, Coca-Cola Enterprises announced that it will merge with two other European bottlers of Coca-Cola — Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke AG — to form the world's largest independent Coca-Cola bottler, Coca-Cola European Partners Limited (CCEP). The transaction is expected to close on or about May 28, 2016.

Coca-Cola Enterprises is a strategic western European bottler of Coca-Cola and has a 10-year bottling agreement with the latter, ending on Oct 2, 2020, for each of its territories.

Coca-Cola Enterprises will hold a 48% stake, while Coca-Cola will own an 18% in CCEP. Shares of CCEP are expected to start trading on stock exchanges in New York, London and Amsterdam from May 31.

Coca-Cola has been divesting and merging bottling operations in many international markets since 2014 to revamp its bottling system and drive margins. Additionally, the company entered into an agreement with beer and beverage company, SABMiller, and partner Gutsche Family Investments, to merge their bottling operations in Southern and East Africa and form the largest Coca-Cola bottling entity in Africa. Coca-Cola will have an 11% stake in the new African bottler. In China, it has agreed to refranchise the company-owned bottling operations to its existing partners, COFCO and Swire.

Coca-Cola Enterprises has a Zacks Rank #2 (Buy) while Coca-Cola has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the beverage sector are Primo Water Corporation PRMW and Molson Coors Brewing Company TAP. Both companies sport a Zacks Rank #1 (Strong Buy).

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