Filed by Coca-Cola
Enterprises Inc. pursuant to
Rule 425 of the
Securities Act of 1933 and
deemed filed pursuant
to Rule 14a-12 of the
Securities Exchange
Act of 1934
Subject Company:
Coca-Cola Enterprises Inc.
Commission File
No.: 001-09300
John
Brock
Email
to (US Users, CA Users, GB Users and European Top 270) for 7:20 a.m.
ET
February
25, 2010
Subject:
Coca-Cola Enterprises and The Coca-Cola Company Announce Agreement to
Strategically Advance and Strengthen the Coca-Cola System in North America and
Europe
This
morning we are announcing key changes that will strategically advance and
strengthen the Coca-Cola system in North America and Europe. For the
past three years, Coca-Cola Enterprises has led the transformation of our
business and solidified our role as a world-class bottler. We are
driving new levels of efficiency and effectiveness and generating consistent
financial results. Our 2009 performance was the best in our history,
reflecting significant profit improvement in North America, three consecutive
years of strong balanced growth in Europe, and our first year of margin
expansion since 2003.
As we
have worked to transform our business, Muhtar Kent and I have discussed what
business model would create the most value for the Coca-Cola system in North
America and in Europe. As a result, we have accelerated the scope and
pace of change required to position our business model for a 21st
century marketplace, and today’s announcement is the next step in this
transformation.
Strengthening
the North American Coca-Cola System and Expanding Our European Footprint to
Increase Shareowner Value
There are two key outcomes of our
announcement. First, The Coca-Cola Company will acquire all of our
North American operations and integrate them with the majority of their North
American businesses. Second, CCE will expand its role as the
preeminent Western European Coca-Cola bottler. The Coca-Cola Company and
Coca-Cola Enterprises have agreed in principle that CCE will buy The Coca-Cola
Company’s bottling operations in Norway and Sweden, subject to the signing of
definitive agreements and regulatory approval.We also will have the right to acquire
the German bottler, owned by The Coca-Cola Company, during the next 18 to 36
months.
These
developments are a monumental moment in Coca-Cola history and an acknowledgement
of our performance as a world-class, high-performing bottler. We have
worked to drive effectiveness and efficiency to new levels in our system, and
Coca-Cola
Enterprises
and The Coca-Cola Company are more aligned than ever before. Now, we
can take this work to even higher levels.
Today, we
are creating the next generation North American business model by combining our
core strengths and resources to more profitably deliver the world’s greatest
brands. In Europe, we are leveraging a greater opportunity to drive
enhanced, sustainable earnings growth through superior service to
customers. For our shareowners, this creates a compelling value
proposition as they will realize full and substantial consideration for our
North American business while receiving the benefit that will come from
unlocking the growth potential of our European business.
Preeminent
Western European Bottler
For our
on-going CCE European business, we will retain the CCE name, and I will become
Chairman and CEO. Several other members of the current CCE corporate
management team will continue to lead the company, and we will give more details
in the next few weeks. The current CCE independent Directors will
comprise the new CCE Board. CCE will be headquartered in Atlanta and
continue to be traded on the New York Stock Exchange as CCE.
CCE will
become the third-largest independent bottler globally, with net revenue of
approximately $7 billion. Our European business serves an attractive
market with growing volumes and profit driven by rising per capita
consumption. The new CCE will have enhanced revenue, margins, and EPS
growth prospects. As we expand our European footprint to provide broader
geographic coverage, we will optimize our marketing and distribution advantages
and will have greater financial flexibility and operational
focus. Under the continued leadership of Hubert and his team, I have
confidence that we will build on our three solid years of profitable growth in
Europe.
Next
Generation Business Model for North America
In North
America, all of CCE’s operations will be acquired by The Coca-Cola
Company. Following the close of the deal, this business will be
renamed Coca-Cola Refreshments (CCR). The majority of The Coca-Cola
Company’s North American businesses including Foodservice, The Minute Maid
Company and Supply Chain operations, including hot-fill, will be combined into
CCR. CCR will be organized as a unified operating entity with
distinct capabilities including supply chain and logistics, and sales and
customer service operations.
This
model will improve our speed and flexibility to market, create a low-cost and
efficient manufacturing, supply chain and logistics operation and drive greater
value for our customers and consumers. This builds on the tremendous
progress that Steve and his team have made to grow our operating income, drive
effectiveness and efficiency in everything we do, enhance our customer
relationships and pursue innovative routes to market. However,
we
have
reached an inflection point, and I believe a paradigm shift in the system is
necessary to truly drive sustainable, profitable growth.
CCE
Paves the Way for New Era of Long-Term Growth and Winning
Since the
launch of CCE in 1986, we have demonstrated how the world’s largest Coca-Cola
bottler could execute locally with precision and passion. As we have
grown, our marketplace has changed dramatically through retail consolidation and
increasing consumer demand for variety in sparkling and still
beverages. As a result, we accelerated change and worked to transform
our traditional operating model to keep pace with an increasingly dynamic
marketplace. We aligned against our Global Operating Framework,
streamlined our North American structure and launched a series of initiatives
like Coca-Cola Supply, Right Execution Daily and Ownership Cost Management to
drive effectiveness and efficiency.
This has
paved the way for the next generation North American business model and
strengthened our ability to win long-term in Europe.
Transitioning
to the New North American and European Operating Models and Delivering
2010
While
today is the beginning of a new journey for our business, the transaction is
subject to regulatory and shareowner approval, which we anticipate will occur by
the end of the year. Whether you are in Europe or in North America, we must all
remember that our number one priority is maintaining a single-minded focus on
serving our customers with excellence and delivering our 2010 business
plan. We have worked too hard and come too far to lose our
momentum.
As we go
through this transition, we will be transparent about the process and maintain
an open dialogue with you. With this in mind, the ELT will host a
Virtual Town Hall at 1:30 p.m. ET today to discuss the announcement and answer
questions. This broadcast will be available the following day on our
Intranet, which will serve as an on-going resource for updated and timely
information related to the transaction. Recognizing that this Town
Hall is late in the day for our European colleagues, Hubert will conduct a live
broadcast today at 3:00 pm GMT. I also plan to host a conference call with our
senior leaders there on Friday.
In
closing, this is a significant day for the Coca-Cola system. We will
be faster, more decisive and more responsive to marketplace needs than ever
before. This will create important synergies, and in doing so, we will usher in
a new era of growth and profitability for our system. This is an
exciting development in the history of the world’s greatest brands, and we are
making our mark on the Coca-Cola system legacy.
Much will
unfold in the coming months, and we will communicate with you frequently and
candidly throughout the process. In the meantime, running the
business should be our priority – stay focused, execute and keep the momentum of
2009 alive.
Thanks
for all that you do.
Sincerely,
John F.
Brock
Chairman
and CEO
Coca-Cola
Enterprises
IMPORTANT
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This
communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or
approval. In connection with the proposed transaction and required
shareowner approval, the Company will file relevant materials with the
Securities and Exchange Commission (the "SEC"), including a proxy
statement/prospectus contained in a registration statement on Form S-4, which
will be mailed to the shareowners of the Company after the registration
statement is declared effective. The registration statement has not yet become
effective.
SHAREOWNERS
OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC,
INCLUDING THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Shareowners
may obtain a free copy of the proxy statement/prospectus, when it becomes
available, and other documents filed by the Company at the SEC's web site at
www.sec.gov. Copies of the documents filed with the SEC by the Company will be
available free of charge on the Company's internet website at www.cokecce.com
under the tab "Investor Relations" or by contacting the Investor Relations
Department of Coca-Cola Enterprises at 770-989-3246.
PARTICIPANTS
IN THE SOLICITATION
The
Company and its directors, executive officers and certain other members of its
management and employees may be deemed to be participants in the solicitation of
proxies from its shareowners in connection with the proposed transaction.
Information regarding the interests of such directors and executive officers was
included in the Company's Proxy Statement for its 2009 Annual Meeting of
Shareowners filed with the SEC March 3, 2009 and a Form 8-K filed on December
18, 2009 and information concerning the participants in the solicitation will be
included in the proxy statement/prospectus relating to the proposed transaction
when it becomes available. Each of these documents is, or will be, available
free of charge at the SEC's web site at www.sec.gov and from the Company on its
web site or by contacting the Shareowner Relations Department at the telephone
numbers above.