Coca-Cola to acquire operations of largest bottler

NEW YORK — Coca-Cola plans to buy the North American operations of its largest bottler in an effort to put more new drinks on shelves more quickly to keep up with changing tastes.

The move comes just days before main rival PepsiCo is expected to complete a similar deal.

The Coca-Cola deal marks a change in strategy — at least publicly — for Coca-Cola Co., which has defended its arrangement of being separate from its bottlers ever since PepsiCo announced its $7.8 billion deal to buy its two biggest North American bottlers in August.

Both companies want to control distribution in their domestic market, where soft drink sales are slumping as people switch to juices and teas or skip purchases to save money.

The shift means shoppers will see more new drinks — like coconut water, exotic teas and sports beverages — on store shelves. Products that don't sell will disappear more quickly. And shoppers may not find the same choices in the same places because Coca-Cola will have more control over where products appear, right down to the shelf, and how much they cost.

Coca-Cola's deal calls for the maker of Sprite, Coke and other beverages to give up its 34 percent stake in bottler Coca-Cola Enterprises Inc., worth $3.4 billion, and assume $8.88 billion in debt.

In a separate deal, Coca-Cola will sell its own Norwegian and Swedish bottling operations to Coca-Cola Enterprises for $822 million. Coca-Cola Enterprises also gets an option to buy Coca-Cola's 83 percent stake in its German bottling operations.

Coca-Cola Enterprises shareholders will get one share of a new Coca-Cola Enterprises company focused only on European bottling and a one-time $10-per-share payment. The company plans to issue debt to finance this payment and the European acquisition. It had 490 million shares outstanding at the end of fiscal 2009, so taking out Coca-Cola's stake, cash payouts should be about $3.2 billion to shareholders.

Following the deal, Coca-Cola will control about 90 percent of the bottling of its products in North America, while PepsiCo's pending deal will give the company control of 80 percent. That deal is expected to close by the end of the month.

The Coca-Cola move surprised investors because CEO Muhtar Kent had denied interest in such a move since PepsiCo's deal was announced. On Thursday, he insisted the deal wasn't a reversal of strategy.