Coca Cola 2010 Annual Report Download - page 104

NOTE 2: ACQUISITIONS AND DIVESTITURES
Acquisitions
During 2010, cash payments related to the Company’s acquisition and investment activities totaled $2,511 million. These
payments were primarily related to the Company’s acquisition of CCE’s North American business and the acquisition of
certain distribution rights from Dr Pepper Snapple Group, Inc. (‘‘DPS’’). See the relevant sections below for further
discussion of these transactions.
In addition to the transactions listed in the preceding paragraph, our acquisition and investment activities also included
the acquisition of OAO Nidan Juices (‘‘Nidan’’), a Russian juice company, and an additional investment in Fresh
Trading Ltd. (‘‘innocent’’). Total consideration for the Nidan acquisition was approximately $276 million, which was
primarily allocated to property, plant and equipment, identifiable intangible assets and goodwill. We anticipate finalizing
the purchase accounting for Nidan no later than the end of the third quarter of 2011. Under the terms of the
agreement for our additional investment in innocent, innocent’s founders retain operational control of the business, and
we will continue to account for our investment under the equity method of accounting. Additionally, we have a series of
outstanding put and call options with the existing shareowners of innocent for the Company to potentially acquire the
remaining shares not already owned by the Company. The put and call options are exercisable in stages between 2013
and 2014.
In 2009, our Company’s acquisition and investment activities totaled $300 million. None of the acquisitions or
investments was individually significant. Included in these investment activities was the acquisition of a minority interest
in innocent.
During 2008, our Company’s acquisition and investment activities totaled $759 million, primarily related to the purchase
of trademarks, brands and licenses. Included in these investment activities was the acquisition of brands and licenses in
Denmark and Finland from Carlsberg Group Beverages for approximately $225 million. None of the other acquisitions
or investments was individually significant.
Acquisition of Coca-Cola Enterprises Inc.’s North American Business
Pursuant to the terms of the business separation and merger agreement entered into on February 25, 2010, as amended
(the ‘‘merger agreement’’), on October 2, 2010 (the ‘‘acquisition date’’), we acquired CCE’s North American business.
We believe this acquisition will result in an evolved franchise system that will enable us to better serve the unique needs
of the North American market. The creation of a unified operating system will strategically position us to better market
and distribute our nonalcoholic beverage brands in North America. Refer to Note 18 for information related to the
Company’s integration initiative associated with this acquisition.
Under the terms of the merger agreement, the Company acquired the 67 percent of CCE’s North American business
that was not already owned by the Company for consideration that included: (1) the Company’s 33 percent indirect
ownership interest in CCE’s European operations; (2) cash consideration; and (3) replacement awards issued to certain
current and former employees of CCE’s North American and corporate operations. At closing, CCE shareowners other
than the Company exchanged their CCE common stock for common stock in a new entity, which was renamed
Coca-Cola Enterprises, Inc. (which is referred to herein as ‘‘New CCE’’) and which continues to hold the European
operations held by CCE prior to the acquisition. At closing, New CCE became 100 percent owned by shareowners that
held shares of common stock of CCE immediately prior to the closing, other than the Company. As a result of this
transaction, the Company does not own any interest in New CCE.
As of October 1, 2010, our Company owned approximately 33 percent of the outstanding common stock of CCE. Based
on the closing price of CCE’s common stock on the last day of trading prior to the acquisition date, the fair value of
our investment in CCE was approximately $5,373 million, which reflected the fair value of our ownership in both CCE’s
North American business and European operations. We remeasured our equity interest in CCE to fair value upon the
close of the transaction. As a result, we recognized a gain of approximately $4,978 million, which was classified in the
line item other income (loss) — net in our consolidated statement of income. The gain included a $137 million
reclassification adjustment related to foreign currency translation gains recognized upon the disposal of our indirect
investment in CCE’s European operations. The Company relinquished its indirect ownership interest in CCE’s
European operations to New CCE as part of the consideration to acquire the 67 percent of CCE’s North American
business that was not already owned by the Company.
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