Will Coca-Cola Enterprises steer clear of Coca-Cola Cos German bottling operations?

Will Coca-Cola Enterprises steer clear of Coca-Cola Co's German bottling operations?

A tough final quarter for The Coca-Cola Co in Europe makes Coca-Cola Enterprises' move for the former's bottling operations in Germany less likely, an analyst has suggested.

Earlier today (12 February), Coca-Cola posted a healthy set of Q4 and FY results, although volumes in Europe slipped by 1% in 2012. In Germany, volumes were up by 1% for the year, but down by 5% in the final quarter.

After Coca-Cola bought Coca-Cola Enterprises' North America operations in 2010, CCE was given the option to buy Coca-Cola's operations in Germany. That option is set to expire in May.

In a note released shortly after Coca-Cola's results announcement today, US-based Stifel said it does not now expect CCE to take up the German option.

"We take this as a strong indication CCE is unlikely to buy Coke bottling in the (German) region," the analyst said. "We ... believe CCE is unlikely to make the purchase, because management does not seem predisposed to taking on a turnaround facing new challenges."

Stifel also said it expects the "Europe weakness" to moderate in the coming years. "We... take the results as further evidence that the company is struggling to produce operating leverage and is unlikely to see volumes accelerate past 4% (for full year)," the analysts said.

Coca-Cola's shares opened down this morning and stood at US$37.82 at 1000 EST, a fall of 2%.