The Work

February 25, 2010 1:23 PM

Coke Follows Pepsi, Acquires Bottler in $12 Billion Deal

Posted by Zach Lowe

Skadden, Arps, Slate, Meagher & Flom advised Coca-Cola on the soft drink giant's $12.2 billion deal to acquire the North American operations of its largest bottler, Coca-Cola Enterprises, a deal that follows PepsiCo's move in August to take control of its two largest bottlers for $7.8 billion.

The move to take a controlling stake in major bottlers represents a reversal of strategy for both Coca-Cola and Pepsi, according to Bloomberg and our prior reporting. Through the 1980s and 1990s, the companies both preferred a set-up in which they maintained minority stakes in bottlers worldwide and used those bottlers as intermediaries in favorable deals to acquire smaller bottlers, according to Bloomberg and the Wall Street Journal. But with consumers moving away from soda-only buying patterns (there's a vitaminwater on our desk right now), Coca-Cola and Pepsi want a stronger hand in controlling the distribution and marketing of beverages, Bloomberg and WSJ say.

Skadden has advised Coca-Cola on prior deals and would-be deals, including its offer in late 2008 to acquire a Chinese juice company--a deal the Chinese government later blocked, according to The New York Times. Martha McGarry led the firm's team on the deal; she did not immediately return messages seeking comment.

Cleary Gottlieb Steen & Hamilton and Wilson Sonsini Goodrich & Rosati both provided antitrust advice to Coca-Cola. Lawyers at those firms did not return calls for comment. 

A Cahill Gordon & Reindel team led by corporate partners Helene Banks, Gerard Meistrell, Jonathan Mark, John Schuster, and William Miller advised Coca-Cola Enterprises. Banks did not return a call seeking comment and Meistrell declined to comment, saying Cahill has a blanket policy of "not talking about work we do." McKenna Long & Aldridge, a firm with a strong presence in Atlanta (where both Coke and CCE are based) advised a committee of Coca-Cola Enterprise directors considering the transaction. Jeffrey Haidet, the firm's chair and a partner who has done work for the bottler before, did not return a message seeking comment. 

Under the terms of the deal, Coca-Cola will give up its 34 percent stake in CCE but assume nearly $9 billion in debt, the WSJ says. CCE in turn agreed to purchase Coca-Cola's bottling operations in Norway and Sweden for about $822 million, and to take an 83 percent stake in Coca-Cola's German bottling operations in "the near future," the WSJ says. Shareholders of CCE will get one share of Coca-Cola and $10 for each CCE share they own. 

Coca-Cola says it will now control 90 percent of its volume in North America with the deal. 

Other Skadden partners on the deal include: Sean Doyle (M&A), David Rievman (tax), Neil Leff (executive compensation), Richard Aftanas (corporate finance), and Sarah Ward (banking). 

Cleary partners Nicholas Levy and Mark Leddy led the firm's antitrust team on the matter for Coca-Cola.

Also on the deal for Cahill: Tax partners Benjamin Cohen, Aliza Levine, and L. Howard Adams; antitrust partner Elai Katz; employee benefits partner Glenn Waldrip, Jr.; and environmental partner Robert Hallman.

McKenna partners Clay Long, F.T. "Tread" Davis and David Brown led the firm's team on the deal for the CCE directors.

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