Coca-Cola Bottling has signed a letter of intent (LoI) with Coca-Cola to expand the company’s franchise territory.
The LoI will provide additional distribution rights for the company in parts of Tennessee and Kentucky which include major markets, Knoxville, Tennessee and Lexington and Kentucky.
Coca-Cola's wholly-owned subsidiary Coca-Cola Refreshments USA (CCR) serves the territory at present.
According to Coca-Cola Bottling, the proposed deal for acquiring distribution rights will be accomplished by a sub-bottling arrangement with CCR under which it would make ongoing payments to CCR in exchange for the exclusive distribution rights.
As part of the deal, CCR would also transfer its rights in the territory to distribute brands that are not owned by Coca-Cola to the company.
The company will also acquire distribution assets and certain working capital from CCR relating to the expanded territory.
Coca-Cola Bottling chairman and CEO Frank Harrison, III said, "Working closely with The Coca-Cola Company and our U.S. bottling partners, we believe that we are well positioned to help drive increased value in the Coke System."
Closing of the transaction is expected to occur during the latter part of 2014.
