Coca Cola 2014 Annual Report Download - page 89

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NOTE 2: ACQUISITIONS AND DIVESTITURES
Acquisitions
During 2014, our Company’s acquisitions of businesses, equity method investments and nonmarketable securities totaled $389 million
and primarily included a joint investment with one of our bottling partners in a dairy company in Ecuador, which is accounted for
under the equity method of accounting.
During 2013, our Company’s acquisitions of businesses, equity method investments and nonmarketable securities totaled $353 million,
which primarily included our acquisition of the majority of the remaining outstanding shares of Fresh Trading Ltd. (“innocent”) and
a majority interest in bottling operations in Myanmar. The Company previously accounted for our investment in innocent under
the equity method of accounting. We remeasured our equity interest in innocent to fair value upon the close of the transaction. The
resulting gain on the remeasurement was not significant to our consolidated financial statements.
During 2012, our Company’s acquisitions of businesses, equity method investments and nonmarketable securities totaled
$1,486 million. These payments were primarily related to the following: our investments in the existing beverage business of Aujan
Industries Company J.S.C. (“Aujan”), one of the largest independent beverage companies in the Middle East; our investment in
Mikuni Coca-Cola Bottling Co., Ltd. (“Mikuni”), a bottling partner located in Japan; our acquisition of Sacramento Coca-Cola
Bottling Co., Inc. (“Sacramento bottler”); and our acquisition of bottling operations in Vietnam, Cambodia and Guatemala. The
Company’s investment in Mikuni was accounted for under the equity method of accounting prior to 2013, when this investment was
merged with three other bottlers to form Coca-Cola East Japan Bottling Company, Ltd. (“CCEJ”). Refer to Note 17 for details on
this transaction. The Company paid $820 million during 2012 under its definitive agreement with Aujan in exchange for an ownership
interest of 50 percent in the entity that holds the rights in certain territories to brands produced and distributed by Aujan and an
ownership interest of 49 percent in Aujan’s bottling and distribution operations in certain territories. The Company’s investments in
Aujan are being accounted for under the equity method of accounting.
Green Mountain Coffee Roasters, Inc.
In February 2014, the Company and Green Mountain Coffee Roasters, Inc., now known as Keurig Green Mountain, Inc. (“Keurig”),
entered into a 10-year global strategic agreement to collaborate on the development and introduction of the Company’s global brand
portfolio for use in Keurig’s forthcoming Keurig Kold™ at-home beverage system. Under the agreement, the companies will cooperate
to bring the Keurig Kold™ beverage system to consumers around the world, and Keurig will be the Company’s exclusive partner for
the production and sale of our branded single-serve, pod-based cold beverages. Together we will also explore future opportunities
to collaborate on the Keurig® platform. In an effort to align long-term interests, we also entered into an agreement to purchase
a 10 percent equity position in Keurig, and on February 27, 2014, the Company purchased the newly issued shares in Keurig for
approximately $1,265 million, including transaction costs of $14 million.
In May 2014, the Company purchased additional shares of Keurig in the market for $302 million, which represented an additional
2 percent equity position in Keurig. We account for the investment in Keurig as an available-for-sale security, which is included in the
line item other investments in our consolidated balance sheet. These purchases were included in the line item purchases of investments
in our consolidated statement of cash flows.
Subsequent to these purchases, the Company entered into an agreement with Credit Suisse Capital LLC (“CS”) to purchase additional
shares of Keurig which would increase the Company’s equity position to a 16 percent interest based on the total number of issued and
outstanding shares of Keurig as of May 1, 2014. Under the agreement, the Company will purchase from CS, on a date selected by CS
no later than February 2015, the lesser of (1) 6.5 million shares of Keurig or (2) the number of shares that shall cause our ownership to
equal 16 percent. The purchase price per share will be the average of the daily volume-weighted average price per share from May 15,
2014, to the date selected by CS, as adjusted in certain circumstances specified in the agreement. CS will have exclusive ownership and
control over any such shares until delivered to the Company. This agreement with CS qualifies as a derivative, and the changes in its
fair value are immediately recognized into earnings.
Coca-Cola Erfrischungsgetränke AG
In conjunction with the Company’s acquisition of 18 German bottling and distribution operations in 2007, the former owners received
put options to sell their respective shares in Coca-Cola Erfrischungsgetränke AG (“CCEAG”) back to the Company in January
2014. The Company paid $503 million to purchase these shares, which was included in the line item other financing activities in our
consolidated statement of cash flows, resulting in 100 percent ownership of CCEAG.