The New Coke

Note: Because of the actuality of the topic I will post an unfinished article. I apologise for that. The new shares will start trading today.

Coca-Cola Enterprises, Inc., Coca-Cola Iberian Partners SA and Coca-Cola Erfrischungsgetränke AG, a wholly owned subsidiary of The Coca-Cola Company, have agreed to combine their businesses into a new company to be called Coca-Cola European Partners Plc (link homepage). The shares will start trading today (CCEP on Euronext).

ISIN GB00BDCPN049 (according to Euronext)

This is the News Release (link) and this is their Investor Presentation (link)

Some interesting Notes from the Presentation:
  • Combined company pro forma 2015 expected annual net
  • revenues of $12.6 billion and EBITDA of $2.1 billion (before synergies)
  • CCEP will be headquartered and incorporated in the United Kingdom and publicly traded on the Euronext Amsterdam, NYSE, and Madrid Stock Exchange
  • Expected to realize annual run-rate pre-tax savings of approximately $350 to $375 million within 3 years of closing
  • Transaction financed with ~$3.3 billion funded by the new company using newly issued debt
  • Expected to have 2015 pro forma net debt to EBITDA ratio of ~3.5x; given anticipated cash flows, expect to de-lever to ~2.5x by year-end 2017
  • Expected dividend payout of 30% to 40% of net income over time

 

The Prospectus can be found on https://www.securitiesinfo.com/

Edit3: A Fact sheet from CCE (link)

 

The new European Partners Revenues by countries (from their Presentation):CCEP.PNG

 

This is a year 2024 Bond of them which is traded at 1,22% yield (link bond consorsbank)

According to euronext there will be listed 482,255,739 shares – I’m not sure if that is equal with shares outstanding (link)

Edit 1: From the Prospectus: The exact number of Orange Shares to be issued will be
determined based on the closing price of White shares on the
NYSE on 27 May 2016. Based on the closing price of White
shares on the NYSE as at 20 May 2016 (being the latest
practicable date before the publication of this prospectus), the
number of Orange Shares expected to be in issue, fully paid, as at
Admission, will be 482,255,739.

 

I played arround with some numbers (recently updated at 13:16 CET!):

CCEP_spread2.PNG

I assumed Synergies of 0,35 bn (like they told), net debt of $ 7,35 bn, an interest rate of 1,22% (maybe to low) and a tax rate of 28% (like they told). I calculated a EPS of 3,9 USD.

From the Prospectus: Adjusted EBITDA and Adjusted Operating Income for 2015 were lower than the Unaudited Orange Financial Projections by US$ 267 million, US$ 28 million and US$ 37 million, respectively.

  • CCE shareowners to receive one share of CCEP and a cash payment of $14.50 per share of CCEP.
    COCO-COLA ENTERPRISES INC trades at around 51.50 USD so CCEP should be at about $ 66.00 (maybe I am missing something about the record date here).

 

I am curious at what price the Shares of the new Coca-Cola European Partners Plc will start to trade at (Bid is at 50 the ask is at 35) (CCEP on Euronext)

Edit 2:
Operation calendar: Start of trading 3:30 pm CET (2:30pm BST; 9:30am EST)
IPO Price: Reference price EUR 33.26 (~37.0 USD) (+/- 20%)
At a $37.0 price and $3.22 EPS this would be a PE-ratio of 11,49
At a 30% payout ratio they would pay out about $0.96, this translates into a yield of 2.5%
Peers:
CCA is trading at a PE of 17.3 and 6.5% yield (link)
CC-HBC is trading at a PE of 22 and 2.3% yield (link)
CC-EastJapan is trading at a PE of 44 and a 1.5% yield (link)

 

Disclaimer: The content contained on this site represents only the opinions of its author(s). I may hold a position in securities mentioned on this site. In no way should anything on this website be considered investment advice and should never be relied on in making an investment decision. As always please do your own research!

 

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