Coca-Cola Bottling (COKE) to Expand Distribution Territory in Several U.S. States
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Coca-Cola Bottling Co. Consolidated (Nasdaq: COKE) announced it has signed definitive agreements with an affiliate of The Coca-Cola Company to expand the bottler’s distribution territory to include territories located within parts of Ohio, Indiana, Illinois, Kentucky and West Virginia and to purchase manufacturing facilities in Ohio and Indiana.
The definitive agreement to expand distribution territory (“Distribution Definitive Agreement”) includes the second phase of the proposed territory expansion described in the previously-announced Letter of Intent dated May 12, 2015 between the Company and The Coca-Cola Company as well as a portion of the proposed territory expansion described in the previously announced Letter of Intent dated June 14, 2016 between the Company and The Coca-Cola Company. The Distribution Definitive Agreement includes the following territories:
- Cincinnati, Columbus and Dayton, Ohio;
- Indianapolis, Bloomington, Terre Haute, South Bend, Fort Wayne, Lafayette and Anderson in Indiana; and
- Louisa, Kentucky.
Coca-Cola Refreshments USA, Inc. ("CCR"), a wholly owned subsidiary of The Coca-Cola Company, currently serves these territories. The Company expects to begin a series of transaction closings for these distribution territories in the fall of 2016 and to complete them in 2017.
The definitive agreement to acquire three manufacturing facilities (“Manufacturing Definitive Agreement”) represents the second phase of the proposed expansion of the Company’s manufacturing facilities described in the previously-announced Letter of Intent dated September 23, 2015 between the Company and The Coca-Cola Company and includes manufacturing facilities located in the following cities:
- Cincinnati, Ohio and
- Indianapolis and Portland, Indiana.
CCR currently owns these manufacturing facilities. The Company expects to begin a series of transaction closings for these manufacturing facilities in the fall of 2016 and to complete them in 2017.
The Company is continuing to work towards definitive agreements with The Coca-Cola Company for the remaining transactions proposed in previously announced Letters of Intent dated February 8, 2016 and June 14, 2016, including:
- the expansion of distribution territories in parts of northern Ohio and northern West Virginia;
- the purchase of a manufacturing facility in Twinsburg, Ohio; and
- the exchange of distribution territory in the southern parts of Alabama, Georgia and Mississippi and a manufacturing facility in Mobile, Alabama for distribution territory in parts of Arkansas, southwestern Tennessee and northwestern Mississippi and manufacturing facilities in Memphis, Tennessee and West Memphis, Arkansas.
The Company is also continuing to work towards a definitive agreement with Coca-Cola Bottling Company United, Inc. (“United”) for the exchange of distribution territory in south-central Tennessee, northwest Alabama, and northwest Florida for distribution territory in and around Spartanburg and Bluffton, South Carolina, as proposed in the previously announced Letter of Intent dated June 14, 2016 between the Company and United.
The Distribution Definitive Agreement and other agreements to be entered into at the closings thereunder will provide the Company the exclusive rights to distribute beverage brands owned by The Coca-Cola Company as well as certain other beverage brands not owned by The Coca-Cola Company that are currently being distributed in the territories described above by CCR. The transaction includes the purchase by the Company of distribution assets and certain working capital items from CCR relating to these territories and the purchase of exclusive rights to distribute certain non-Coca-Cola beverage brands in these territories. The transaction also includes the grant by CCR to the Company of exclusive rights to distribute beverage brands owned by The Coca-Cola Company in these territories under a comprehensive beverage agreement to be entered into at closing. Under such agreement, the Company will make a quarterly sub-bottling payment to CCR on a continuing basis after the closing for the grant of such exclusive rights.
The Manufacturing Definitive Agreement and other agreements to be entered into at the closings thereunder will provide the Company with the rights to manufacture and produce beverage brands owned by The Coca-Cola Company as well as certain other beverage brands not owned by The Coca-Cola Company that are currently being manufactured by CCR at such facilities, if any. The transaction includes the purchase by the Company of manufacturing assets and certain working capital items from CCR relating to these manufacturing facilities.
Closings of the transactions covered by the definitive agreements are subject to the parties satisfying certain conditions. There can be no assurances that these conditions will be satisfied or, if not satisfied, waived. The Company will file a Current Report on Form 8-K with the Securities and Exchange Commission regarding the proposed transactions that will be available on the Commission’s website at http://www.sec.gov and on the Company’s website at http://www.cokeconsolidated.com. For more information about the transactions, including the closing conditions and the Company’s relationship with The Coca-Cola Company, investors should read the information included in the Company’s Current Report on Form 8-K that will be filed and the agreements filed as exhibits to such report.
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