Coca-Cola Bottling Co. Consolidated, the nation’s largest independent Coca-Cola bottler, announced it has signed a definitive agreement with The Coca-Cola Company to expand the bottler’s franchise territory to include the Morristown and Johnson City, Tennessee territories currently served by Coca-Cola Refreshments USA, (CCR), a wholly-owned subsidiary of The Coca-Cola Company.
This agreement represents the first phase of the proposed franchise territory expansion described in the previously-announced Letter of Intent between the Company and The Coca-Cola Company. The Company expects the transaction to close by the end of May 2014.
The Company is continuing to work towards a definitive agreement with The Coca-Cola Company for the remainder of the proposed franchise territory expansion described in the previously-announced Letter of Intent, including Knoxville, Cleveland and Cookeville, TN and Louisville, Lexington, Paducah and Pikeville, KY and Evansville, IN.
"We are excited about reaching this agreement with The Coca-Cola Company to grow our Company. We believe that the refranchising of these territories of the Coca-Cola system will position us to deliver increased value for our customers, shareowners and employees," Coca-Cola Consolidated Chairman and CEO J. Frank Harrison III said.
The definitive agreement and other agreements to be entered into at closing will provide the Company the exclusive rights to distribute brands owned by The Coca-Cola Company as well as certain other brands not owned by The Coca-Cola Company that are currently being distributed in the Morristown and Johnson City territories 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 brands in these territories.
The transaction also includes the grant by CCR to the Company of exclusive rights to distribute 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 Company will not acquire any production assets from CCR and will, with certain exceptions, purchase finished goods from CCR to service customers in these territories.
