Exclusive - CAGE 2013 - Coca-Cola Enterprises reveals US$700m war-chest, but no decision on Germany
Coca-Cole Enterprises is sitting on US$700m
Coca-Cola Enterprises (CCE) is sitting on a war-chest of around US$700m, but has yet to decide on whether it will use the funds in the M&A arena, or increase its share repurchase programme.
The US-based bottler, which operates in north-west Europe, confirmed yesterday (18 March) that it has a “leverage opportunity” of $700m. Among its options for the cash is exercising the option to acquire Coca-Cola's bottling operations in Germany – an option that expires in May, embarking on M&A activity in other non-alcoholic ready-to-drink segments, or increasing its share repurchasing transactions.
Speaking at the first day of the CAGE conference in London yesterday (18 March), John Brock, CCE's CEO, said that the firm is considering its options - despite the pending deadline for making the German transaction.
“Our previous comments on Germany still apply,” said Brock. “When we have something to communicate, we will communicate it. We will look at Germany just like we would look at any other transaction: We'll consider what that value creation model would look like."
He added: "We'll consider it compared to all other options, including share repurchases.”
CFO Bill Douglas echoed Brock's comments. “The route we choose – be it the share repurchase programme or M&A - will focus on driving value,” he told CAGE delegates. “Any opportunity will be evaluated for its impact on cash flows.”
In 2011 and again last year, CCE completed $800m-worth of share repurchases. The current estimate for this year's programme stands at around $500m.
When asked about M&A opportunities, Brock refused to specify which gaps in CCE's portfolio he would like to fill. “We'd like to have a more broad portfolio,” he conceded, “but so many of the other segments are not as attractive as the ones we're in. The juice and juice drinks segments in Europe are generally more challenging than in markets like the US, where you have branded products with higher share. Here, we have private label that has much higher share.
“Whatever we do outside of the sparkling category, there are some pockets out there where we think there are some opportunities, but we'll look at them very selectively.”
CCE used the CAGE presentation to affirm its full-year guidance for 2013. Earnings per diluted share is forecast to grow by around 10%, with net sales and operating profits rising within a mid-single-digit range.
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