EUROPE: Coca-Cola Enterprises to hold fire on German bottling bid - analyst
Coca-Cola Enterprises released its H1 results yesterday (24 July)
Comments in a conference call following the release of CCE's H1 results suggest the company is instead readying plans for a massive share repurchase, Stifel Nicolaus said in a note yesterday (24 July). CCE CFO Bill Douglas told investors a plan is in place to grow net debt/EBITDA from 2.0x to 2.5/3.0x by 2013.
Douglas said the company will announce further details in December, something Stifel Nicolaus said it would not do if was about to bid for the German bottling assets.
“We therefore consider it likely that CCE will announce a big stepup in repurchase in December,” the note said. The analysts estimate CCE will repurchase at least US$700m in shares by the end of the year - $100m above CCE's figure - and another $700m next year. CCE has already repurchased $375m in shares this year.
Following Coca-Cola Co's acquisition of Coca-Cola Enterprises' operations in North America in 2010, the rump CCE business in Europe was granted the option to buy Coca-Cola's bottling operations in Germany. That window opened last August, but CCE has been silent about its plans.
Stifel Nicolaus has previously estimated CCE will take up the option next May.
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